Lazard Says U.S. Economic Pain to Mean More Restructurings

(Bloomberg) -- The slow U.S. response to the pandemic and a surge in Covid-19 cases in several states portend bigger problems for the economy and an increase in demand for corporate restructurings, according to Lazard Ltd. Chief Executive Officer Ken Jacobs.

“There's some likelihood that some of the gains that were made in May and June could be slowing,” Jacobs said in a telephone interview Friday after the company released second-quarter results.

Jacobs, whose firm is one of the biggest restructuring advisers, said the market rebound has delayed some of the financial hardship that would have otherwise struck troubled companies, but an uneven economic recovery means more of that pain will start to materialize in coming months.

The U.S. economy shrank at a record 32.9% annualized pace in the second quarter, and jobless claims posted the largest increase since early May for the week ended July 18. While some gauges of employment and consumer spending have improved since reopenings began and federal stimulus aid reached Americans, the recent surge in infections has tempered the pace of the recovery.

Lazard's shares, which have slumped 27% this year, climbed 5.3% at 9:51 a.m. in New York.

Read more about Lazard's second-quarter results

Jacobs also said Europe's recovery efforts have been “probably more effective than the U.S. fiscal measures were,” contributing to the relative weakness of the U.S. dollar. Despite encouraging signs for Europe, “it's still early to declare victory,” he said.

Lazard's financial-advisory revenue slipped 11% from the second quarter of 2019, and asset-management fees dropped 16%, the company said in a statement.

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