S&P analysts say Lehman not expected to fail

NEW YORK (Reuters) - Standard & Poor's analyst Scott Sprinzen on Friday said he does not expect Lehman Brothers LEH.N to fail and said its near-term liquidity is satisfactory.

"We don't expect Lehman to fail," Sprinzen said on a conference call sponsored by the Argyle Executive Forum.

Asked about S&P's concerns about overall counterparty and systemic risks in the market, S&P analyst Tanya Azarchs said concerns are "very, very high" because of skittish market conditions and tight liquidity.

"Lehman was pretty conservatively positioned all along" and in recent quarters has added to surplus liquidity, Sprinzen said.

Sprinzen told Reuters on Thursday that he did not expect a takeover of Lehman similar to that of Fannie Mae or Freddie Mac or the deal brokered for Bear Stearns in March.

Lehman can survive, "given the strength of their near-term liquidity, including their access to existing Fed facilities," Sprinzen said in an e-mail on Friday, noting S&P is not making any assumptions about additional government support.

Lehman and U.S. officials were in intensive talks about a possible sale of the investment bank after its shares plunged more than 40 percent on Thursday, raising questions about its survival, sources said. A source familiar with Treasury Secretary Henry Paulson's thinking said he was "adamant" that no government money be used in any deal. Lehman wrote down assets by $5.6 billion in the third quarter and posted a loss of $3.9 billion (2.1 billion pounds).

S&P in a statement on Friday said it is evaluating its rating on Lehman following reports that the bank is in discussions to be potentially acquired.

S&P previously had its rating on Lehman on review for downgrade from "A," the sixth-highest investment grade.