March 13 (Bloomberg) -- Bear Stearns Cos., the second- largest underwriter of mortgage-backed bonds, fell to a five-year low in New York trading on concern the company lacks sufficient access to capital.

Bear Stearns dropped $6.21 or 10 percent, to $55.37 at 12:08 p.m. in New York Stock Exchange composite trading, after reaching $50.48 earlier today. The New York-based company has lost 38 percent of its market value this year.

Traders have been reluctant to engage in long-term transactions such as credit-default swaps with Bear Stearns as the counterparty, the Wall Street Journal reported today. Chief Executive Officer Alan Schwartz, who took over from James ``Jimmy'' Cayne in January, denied reports that the firm's access to capital is at risk.

``This is to some degree a panic, and they're affected by a lot of things that aren't rational,'' said Roy Smith, a finance professor at New York University's Stern School of Business and a former partner at Goldman Sachs Group Inc. ``The real problem at Bear Stearns is that this is eating into some of their key businesses,'' such as clearing and prime brokerage.

Bear Stearns led Wall Street shares lower this year as the world's largest banks and securities firms wrote down $188 billion of assets linked to the subprime mortgage market. The company's fourth-quarter loss of $854 million was its first, and analysts in the past month have lowered expectations for earnings in the first quarter.

Options Bets

Options traders increased their bets today that Bear Stearns shares will plummet by more than half in a week.

The most-active contracts, which give the right to sell the stock at $25 before this month's options expire in a week, jumped sixfold to 30 cents. For those wagers to pay off, the shares must drop by 59 percent from yesterday's closing price in the next five trading sessions. March $40 puts, the second-most active, rose fourfold to $1.70.

``People are worried about a catastrophic downside or bankruptcy-type of event that would cut the stock in half,'' said Henry Schwartz, president of Trade Alert LLC, a New York-based provider of options market analytics. ``They're willing to pay an expensive premium for that protection.''

Put-option volume rose to 171,760 contracts, or more than triple the average put volume in the preceding 20 days. Those bearish bets outnumbered bullish ones, or calls, by 2.5 to 1.

Implied volatility, the key factor in determining the value of option contracts, rose to a record 114.07. An increase indicates traders anticipate bigger swings in the stock price.

Calls give the right to buy a security for a certain amount, the strike price, by a given date. Puts convey the right to sell.

``Personally I think they'll survive it, these guys are very smart,'' New York University's Smith said. ``If there's any group on Wall Street that's known for being good money-makers through thick and thin it's Bear Stearns.''

To contact the reporters on this story: Samar Srivastava in New York at ssrivastav11@bloomberg.net; Jeff Kearns in New York at jkearns3@bloomberg.net.

Last Updated: March 13, 2008 12:09 EDT