NEW YORK (Reuters) - Senior unsecured debt of Lehman Brothers LEH.N may receive 60 cents to 80 cents on the dollar in the event of a bankruptcy filing, research firm CreditSights said on Sunday.
Early quotes on such debt are trading even lower in the 32 cents to 35 cents range, CreditSights said. Lehman’s banks and secured creditors could receive 100 cents on the dollar, according to analyst David Hendler, who co-authored the report.
Lehman Brother has about $613 billion in outstanding liabilities, including about $149 billion of corporate bonds, according to a May 31 company filing. CreditSights also sees zero recovery on subordinated debt and preferred stock.
CreditSights also said Lehman Brothers has about $60.2 billion in risky exposures as of the third quarter, including almost $50 billion of real estate exposure — the bulk of which is tied to commercial real estate — and $10.4 billion in acquisition finance exposure.
Lehman’s commercial mortgage exposure includes its investments tied to SunCal Cos, a California property developer, and Archstone-Smith, an apartment building REIT.
Lehman’s failure to find a buyer comes amid news Bank of America Corp (BAC.N) will acquire Merrill Lynch & Co MER.N for $29 a share, the Wall Street Journal reported on Sunday.
“Given the highly skittish market, this stabilizes Merrill’s prospects at a time when the market is concerned about how much more there is to go,” Hendler said in an interview.
“Merrill is bringing them better asset management via BlackRock,” which is highly respected, he said.
One trader also said Lehman’s 2013 and 2018 notes are trading in the range of 34 cents to 40 cents on the dollar.
Reporting by Walden Siew;