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The company, which employs more than 20 staff, had a healthy balance sheet and freehold properties against which to secure borrowings.
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If it isn't clear how much of a bank's assets are pledged against secured borrowings — known as "encumbrance" — then unsecured bondholders can't work out their potential losses if things go awry.
Here was his complaint: Under the terms of the credit agreement, Lehman was required to secure its borrowings with paper carrying a rating of AA or better.
Alexandra S. Parker, a senior vice president in the corporate finance department at Moody's, said the agency was concerned that a downgrade to high-yield status could adversely affect Halliburton's commercial bank credit agreements and force it to seek what Moody's called "alternative financing arrangements," like securing future borrowings with assets.
On Tuesday, Merrill Lynch analyst Kenneth Bruce downgraded the company to "sell," and said it could face bankruptcy if it fails to secure short-term borrowings.
On Thursday, the country could be forced to default on its borrowings if it does not secure a rise in the $16.7 trillion debt ceiling.
Such transactions are known as an "internal repo" because the firm must use the investments to secure the client money, so that any borrowings can be repaid, supposedly with little risk.
Adelphia has said that the borrowings by the Rigas family entities are secured by cable systems that have about 300,000 customers and by Adelphia securities.
In 2008, students secured $20 billion in private loans amounting to roughly a fifth of total undergraduate borrowings for the year.
So the firm borrowed short-term money instead, and it is now refinancing those borrowings.
Net borrowings were pounds 2.5m.
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CEO of Professional Science Editing for Scientists @ prosciediting.com