Replies to post #30084 on Lehman Brothers Financial SA (LEHNQ)

[camaro4me]

"How does the debtor handle this situation? I believe there is no way around it....they must pay their U.S. counterpart, the CTs in full beforehand."

Beforehand - I like that word.

[Starnes]

Hestheman..I found this a bit older but seems to reconfirm what you are saying about the ecaps being on par with US Lehman..Is this how you read this? I understand now that pari passu means "equal footing..
May 09, 2007 02:17 PM Eastern Daylight Time
Fitch Assigns
'A' to Lehman Brothers Holdings Capital Trust VII

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A' rating to Lehman Brothers Holdings Capital Trust VII, a special purpose subsidiary of Lehman Brothers Holdings Inc. (Lehman). Fitch currently rates Lehman at 'A+/F1+' with a Positive Rating Outlook.

Lehman has priced $1.5 billion of fixed and floating Mandatory Capital Advantaged Preferred Securities (MCAPS). Each MCAPS unit consists of a Lehman Brothers Holdings Capital Trust VII trust preferred security, and a contract obligating the holder to purchase new issue non-cumulative perpetual preferred stock by May 2013. Proceeds of the trust preferred issuance will be invested in subordinated notes that rank junior to Lehman's other subordinated notes currently outstanding, but rank pari passu with Lehman's existing $300 million of ECAPS-related subordinated debt due 2035.

The trust preferred securities will likely qualify for regulatory capital treatment under SEC Consolidated Supervised Entity (CSE) rules. The equity-like characteristics of the issue (e.g., loss absorption, ability to avoid cash payments, etc.) result in Fitch 'Class D' treatment (75% equity credit). When the MCAPS-related non-cumulative perpetual preferred stock is issued it may receive Fitch 'Class E' treatment (100% equity credit).

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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