Moody's: U.S. investment banks unaffected

Moody's Investors Service said in a report that the leveraged loan commitments of the major U.S. investment banks do not have negative rating implications at this time.

The investment banks examined are Bear Stearns Companies Inc., Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. Inc. and Morgan Stanley.

"Firms maintain a strong cash capital and overall liquidity position to deal with the funding risks presented by the challenging conditions in leveraged loan distribution," Moody's senior vice president Peter Nerby said in a written statement.

"Furthermore, we believe that they have sufficient earnings strength and diversification to be able to absorb the necessary markdowns on the loan pipeline while still generating positive albeit depressed earnings and a respectable level of profitability," Nerby said.

Moody's also noted that the dislocation in the leveraged loan market was emblematic of the growing capital intensity. "This current situation highlights our longstanding concerns about the growth in illiquid risk assets, including lending commitments, at the large U.S. investment banks," Nerby said.

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