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Investment Bank Cds Trading As "junk" (ba1)

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Bear, Lehman, Merrill Trade as Junk, Derivatives Show (Update1)

By Caroline Salas

July 31 (Bloomberg)

...

-- On Wall Street, Bear Stearns Cos., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Goldman Sachs Group Inc., are as good as junk...

`Wall of Worry'

Prices of credit-default swaps for Goldman, the biggest investment bank by market value, Merrill, the third largest, and Lehman, the No. 1 mortgage bond underwriter, also equate to a Ba1 rating, data from Moody's credit strategy group show. Bonds of New York-based Goldman and Merrill are rated Aa3, seven levels higher than swaps suggest. Lehman is rated A1, the same as Bear Stearns.

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Bear, Lehman, Merrill Trade as Junk, Derivatives Show (Update1)

By Caroline Salas

July 31 (Bloomberg)

Just goes to prove what a load of rubbish both ratings agencies and implied probabilities of default are. Outside of the extremes (i.e. sovereign debt from one of a small number of very stable countries and one end and debt of more or less bankrupt firms at the other) I don't think either provides a remotely accurate prediction of the likelihood of a default.

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