Lehman (LEH) Continues Free-Fall As Investors Worries Mount

Shares of Lehman Brothers (NYSE: LEH) continue their free-fall. At 10AM ET, shares of Lehman were trading down 45%, to $4 per share, as investors worry about the future of the company.

Yesterday, Lehman reported a massive $5.92 per share loss, announced plans to spin off $25-$30 billion of its commercial real estate portfolio into a separate publicly-traded company and announced its intent to sell a majority stake in a subset of its Investment Management Division, among other things. The news did little to calm investors fears.

This morning Goldman Sach, Citigroup and Deutsche Bank downgraded shares of Lehman Brothers. Goldman said uncertainty remains and Citi said confidence and perception issues are overwhelming Lehman's franchise value. DB worries about rating agency moves.

What did the rating agency say? S&P Ratings kept Lehman on ratings watch negative and said the will monitor the company for a possible downgrade. Moody's Investors Service placed on review with direction uncertain the long-term ratings of Lehman Brothers as well as the long-term ratings of the company's principal rated operating and guaranteed subsidiaries. Moody's said that the review with direction uncertain reflects the high degree of fluidity in Lehman's current situation. Moody's believes that Lehman's financial flexibility has become more limited as its stock price has fallen to near all-time lows and the firm is experiencing a crisis of confidence. Although Moody's believes liquidity remains firm and has not shown signs of material erosion, the potential for rapid franchise impairment in this environment remains a significant rating concern for Moody's.

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