Lehman bond holders likely to loose USD 100 bn: Report

London, Sep 23 (PTI) Bondholders of the beleaguered
Lehman Brothers may loose USD 110 billion (about Rs five lakh
crore) on account of decline in the asset-value of the
fourth-largest investment bank in the U.S., media reports say.

The value of the bonds of Lehman Brothers witnessed a
major fall after the investment bank filed for bankruptcy
protection, the Financial Times report said adding, "further
losses on its derivatives positions, which are still being
unwound, could leave even less on the table for bond
investors."

According to the FT report, Loomis Sayles Vice-Chairman
Dan Fuss has said, "I don't know how this will play out for
bondholders, but I doubt if its going to be good."

Loomis Sayles has a small holding in Lehman bonds.

The losses would have a far-reaching effect on ordinary
investors, FT said as Lehman bonds were widely held by
investors such as pension funds and mutual funds.

Meanwhile, those who sold protection against a default or
Lehman bankruptcy will possibly recover 18 cents on the dollar
when the contracts settle in a complicated auction October 10,
the report added.

Before Lehman filed for bankruptcy, its 110 billion-
dollar of senior bonds were quoted around 95 cents on the
dollar. Bond prices then plunged to 35 cents a week ago. They
are now trading at about 18 cents to the dollar.

Quoting Kathleen Shanley of Gimme Credit, an analyst from
a credit research firm, FT said, "Lehman bonds are trading in
the high teens, which reflects the bankruptcy filing, in which
a large number of creditors are competing for a shrinking pool
of assets of uncertain value".

Last week, Lehman inked a deal to sell the North American
investment banking business to Barclays for 1.75 billion
dollar. "Even though approval of the deal was rushed through
court, lawyers for Lehman Brothers said asset values then
dropped to 47.4 billion dollar from about 70 billion dollar,"
the report said.

In its bankruptcy filing, Lehman listed total debts of
USD 613 billion, making it the largest ever US bankruptcy
with USD 128 billion in debt securities, including USD 110.69
billion unsecured debt, USD 17.6 billion in unsecured,
subordinated obligations, the media report said.

Further, FT quoted creditors as saying that Lehman can be
involved in the government's plan to set up a 700 billion-
dollar fund to buy distressed mortgage assets.

So far, there had been no formal discussions among the
creditors about this, said a person involved in the bankruptcy
case. The facility could boost recoveries for various
creditors.