Lehman bond holders likely to lose $100 bn: Report

Bond-holders of the beleaguered Lehman Brothers may lose $110 billion (about Rs five lakh crore) on account of decline in the asset-value of the fourth-largest investment bank in the US, 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.