Lehman, UBS issue billions in stock

Lehman Brothers has priced a $4 billion offering of four million shares of convertible preferred stock.

Investment management firms Lehman Brothers Holdings Inc. and UBS AG are issuing billions of dollars worth of new stock into the market, amid heavy losses mounting from the subprime meltdown.

Lehman Brothers announced late yesterday that it has priced a $4 billion offering of four million shares of convertible preferred stock in response to interest from several long-term clients and institutional investors.

The offering comes two weeks after the New York-based firm revealed that its first-quarter net income fell 57%, due in large part to a $1.8 billion write-down caused by the mortgage crisis and a 52% loss in revenue from its capital markets division (InvestmentNews March 18).

UBS said today it will issue up to $15 billion in new stock as a result of write-downs from residential real estate investments that will saddle the Zurich, Switzerland-based bank with an expected $12 billion in losses for the first quarter (InvestmentNews April 1)/a>.

The bank also raised capital from investors in the Middle East and Singapore in December year in response to $10 billion in write-downs at the end of last year (InvestmentNews Dec. 10).