Moody's cuts Lehman Brothers view to stable

Moody's Investors Service said it affirmed its A1 rating on the senior long-term debt of Lehman Brothers Holdings Inc. and its principal-rated operating and guaranteed subsidiaries.

The agency also said it revised the outlook to stable from positive.

The action recognizes that Lehman has navigated quite well to date through persistently volatile and challenging financial markets, the sharp market-wide decline in valuations across numerous asset classes, tight global liquidity conditions and strong head winds facing Lehman's core-earnings drivers, Moody's said.

However, these conditions have decreased the upward pressure on Lehman's rating, the agency said, and therefore a positive outlook is no longer warranted.

Although Moody's said it expects Lehman to continue to generate acceptable levels of quarterly profitability, the firm's current exposure to commercial and residential real estate will likely pose a not-insignificant burden on profitability for at least the next several quarters.

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