Lehman: Merrill may write down US$5.4Billion in Q2

Source: Exec Digital USA

Date :6/27/2008 5:56:28 AM

Merrill Lynch & Co will likely incur US$5.4 billion of write-downs in the second quarter, Lehman Brothers says.

Lehman Brothers Holdings Inc. has estimated that Merrill Lynch & Co. will post a write-down of US$5.4 billion during Q2, due mainly to the effect of the recent credit downgrades of monoline insurers.

Lehman's estimate is one of the largest so far, following similar estimates from the likes of Goldman Sachs.

After conducting what is described as a “deeper review of the impact of the monoline insurer downgrades and subsequent sharp moves wider in their credit spreads,” Lehman said it increased its estimate of Merrill's second-quarter write-downs by US$3billion

The firm also widened its second-quarter loss expectation for Merrill, to US$2.78 a share from 64 cents a share.

On Thursday, June 26, Goldman Sachs predicted deeper write-downs and losses at Merrill. It expects Merrill to write down $4.2 billion during the quarter.

Merrill shares fell 6.7 percent after the reports and amid a broad decline in financial shares.

Merrill will report its second-quarter results in mid-July.