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Merrill Likely to Write Down Up to $6.5 Billion More

Charles Gasparino, |On-Air Editor
Wednesday, 9 Apr 2008 | 1:55 PM ET

Merrill Lynchis likely to post a first-quarter loss on further writedowns of between $6 billion and $6.5 billion, according to senior executives at the company.

Merrill Lynch
CNBC.com
Merrill Lynch

Unlike earlier writedowns at Merrill and other Wall Street investment banks, the latest round of writedowns is not solely tied to subprime loans, but instead is linked to commercial real-estate debt exposure and other types of loans, these people said.

Merrill so far has written down $24 billion worth of investments related to the troubled U.S. mortgage market.

Merrill is scheduled to report its first-quarter results on April 17. (Video: Charlie Gasparino reports on Merrill's potential writedowns)

On average, analysts surveyed by Thomson Financial are expecting Merrill to post a loss of $1.90 a share. However, the estimates range from a loss of $3.00 a share to a loss of 68 cents a share.

Merrill recently asked its trading desk to unload inventory in an effort to reduce the size of its balance sheet and shore up its credit rating, CNBC has learned.

Merrill's bond rating is now secure, these executives said.

Merrill's efforts follow comments by Chief Executive John Thain, who said Tuesday that the investment bank does not plan on raising any new capital.

Thain spoke at a briefing in Tokyo and said that he expected writedowns would continue to impact Merrill's balance sheet. However, he said, he didn't think the firm would need to raise more capital because it had already raised more capital than it lost.

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