Merrill Lynch & Co. said today it will write down $5.5 billion on souring subprime loans and leveraged loans, resulting in a third quarter loss, reports Reuters.

Here’s more:

Merrill said it would post a third-quarter loss of up to 50 cents a share after writing down $4.5 billion in collateralized debt obligations and subprime mortgage holdings. Merrill had been expected to earn $1.43 a share in the third quarter, according to Reuters Estimates.

It is also taking writedowns, on a gross basis, of $967 million related to all non-investment grade lending commitments, regardless of the timing of funding or closing, the company said.

Analysts were concerned that Merrill’s losses might continue.

“The core issue is whether or not it is going to be enough. Merrill had huge exposures to the mortgage sector, the CDO sector and the collateralized loan sector,” said Sean Egan, managing director of independent credit ratings firm Egan-Jones Ratings Inc.

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Posted in: Company Watch • Subprime news |

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