S&P puts Lehman on developing watch

Standard & Poor's said its ratings on Lehman Brothers Holdings Inc., including the A long-term and A-1 short-term counterparty credit ratings, remain on CreditWatch where they were placed on Sept. 9, but the CreditWatch listing was revised to developing from negative.

On Sept. 10, while pre-announcing its large third-quarter loss and disclosing various planned actions to shore up its capital, Lehman also stated that the firm is committed to examining all strategic alternatives to maximize shareholder value. The agency said that press reports, which have not been commented on by Lehman, have indicated that it is negotiating with other financial institutions regarding the potential sale of the company.

If Lehman were to be acquired, S&P said it could raise the ratings. Barring a takeover, the agency would continue to review Lehman's ratings for a potential downgrade, based on S&P's concerns regarding Lehman's long-range profit potential, its exposure to problematic assets and its capital adequacy.

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