More information on the putative Lehman commercial MBS sale. From Bloomberg:
Lehman Brothers Holdings Inc. may set up a company funded by outside investors to buy some of its mortgage assets, aiming to dispel concern the firm faces crippling losses, people familiar with the discussions said.
Lehman, so far, hasn’t much form in Gordian asset sale structuring - unlike Merrill Lynch, for example.
Hitherto, there’s only really been the suggestion that some of that LEH CMBS debt was being used as collateral in ECB auctions.
But CMBS is not the kind of paper you want on your books right now. Nevermind its use as ECB collateral, this stuff is tanking:
Could CMBS end up being the thing which sinks Lehman? If the CMBX indices are being used as a valuation proxy by the bank, then a writedown, in the most simplistic of terms, could be taken on anywhere up to 50 per cent of the portfolio.
Related links
Lehman: thou shalt deny me thrice before the Cox crows - FT Alphaville
The Bove note on Lehman, in full - FT Alphaville
How did Lehman delever - Naked Capitalism
