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Tuesday, October 07, 2008
Moody's Downgrades Legg Mason To 'A3' From 'A2'
Sue Chang
MarketWatch Pulse
SAN FRANCISCO -- Moody's Investors Service on Tuesday lowered Legg Mason Inc.'s senior debt rating to A3 from A2 and indicated that there could be additional downgrades. The move was due to continued pressure on Legg Mason's business profile and profitability resulting from its financial support of constant net asset value money market funds. "Legg Mason has ample cash for the current cash collateral needs of money market fund support; however, pricing uncertainty and potential future asset sales suggests that Legg Mason could experience a material erosion of its excess cash if such sales occurred at prices significantly below the company's current marks," said Matthew Noll, Moody's vice president. The ratings agency also noted that a further rating cut is possible if additional losses cause the company's excess liquidity to be substantially depleted and further capital is not raised. The outlook is negative.
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A specialist is a member of a stock exchange who works as an auctioneer for a specific stock and/or stocks. It can be an individual, partnership, corporation or group of firms.
The specialist works to maintain a "fair and orderly market" for respective stocks, matching up buyers and sellers by displaying the best "bid" and "ask" prices at its trading post. If buys are not equal to sells, the specialist evens the scale by buying or selling shares, accordingly. However, they cannot make their own transactions until all investor orders have been placed.
Gauging supply and demand, the specialist sets an opening price for the stocks in its domain. If a price has not been set by the time the market opens, the specialist can delay that particular stock's opening.
Specialists make money off the "spread," which is the difference between bid and ask prices on orders.
