NEW YORK -- Problems with soured mortgages and leveraged finance deals likely will hurt third-quarter results of large U.S. investment banks, but a rebound is coming late this year, Standard & Poor's analysts said on Wednesday.

Despite the problems, the largest investment banks should not post third-quarter losses, the analysts said on a conference call.

"A lot of bad news will hit third-quarter results," analyst Scott Sprinzen said.

But this period of correction amid a meltdown among subprime mortgage lenders should be fairly short lived, and a rebound could come in the fourth quarter, he said.

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The S&P analysts also said leveraged loans used in corporate takeovers are being stalled by a complete repricing of credit risk that is long overdue.

While pricing and loan terms are at issue, there is not a deterioration of corporate credit. The analysts see no reason for a build-up of defaults among corporations.

They also said they expect the ratings of the largest investment banks and brokerages, which include Goldman Sachs , Bear Stearns, Lehman Brothers, Merrill Lynch & Co. Inc. and Morgan Stanley, to remain stable.

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