Fitch cuts Lehman debt to C

Fitch Ratings said it downgraded the long- and short-term issuer default ratings and outstanding debt ratings of Lehman Brothers Holdings Inc., parent of Lehman Brothers Inc. and other subsidiaries. The company's long-term issuer default rating was cut to D from A+, short-term issuer default rating to D from F1, senior debt to CCC from A+, subordinated debt to C from A and preferred stock to C from A.

Fitch also said it removed the company's long- and short-term ratings from rating Watch negative, where it was placed Sept. 9.

The downgrade follows Lehman's declaration of bankruptcy. The ratings of the subsidiaries will remain on rating Watch negative and will likely be downgraded as additional information becomes available, Fitch said.

The bankruptcy declaration results from an inability to raise additional capital or effect a merger in the very near term, the agency said. Liquidity has become constrained, Fitch said, extremely limiting flexibility, particularly for its U.K. broker-dealer, Lehman Brothers Holdings plc.

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