Jefferies & Co. is readying for a high-yield liquidity crunch and a pick up in volatility among lower-rated credits. "Our view is the ability of the public high-yield market to continue to provide capital for these transactions [will be more limited]," explained Neil Wessan, managing director and co-head of the private debt placement group, which was launched a year ago (BW, 3/22). "I've been doing this for 20 years... and I've seen this movie before," he quipped, forecasting the credit cycle will soon turn, liquidity will start to dry up and middle market companies will find themselves without access to capital.
Jefferies is bulking up its private debt placement group, which focuses on middle market companies, accordingly and has added John Ponterotto, president and head of private placements for Financo Securities, as senior v.p. Wessan explained the group's primary responsibility is in distribution and is expanding in anticipation of a pick up in volatility. "As prices get to rich levels, we'll start to see volatility pick up and more secondary trading opportunities," he said.