DealZone

The distressed market has Alzheimer’s

April 16, 2010

The recent positive signals in the economy may be misread and cloud people’s memories of the financial crisis, restructuring experts said at the Tulane Corporate Law Institute in New Orleans.

“The positive signals we see have led economists to say the recession is over even though the mortgage delinquency rate is still climbing,” said Barry Ridings, managing director and vice chairman at Lazard Freres.

 “The negative is that people are seeing less risk in the market despite $80 oil, prospects for inflation. It’s almost like the market has Alzheimer’s. They forget what happened last year and with Lehman Brothers,” Ridings said.

Still, the “high yield market is nothing short of being on fire,” Ridings said. “The opening of the high yield market means more M&A opportunities coming down the pike. The  The M&A market will improve and  you’ll see more bankruptcies.”

Vice Chancellor Leo Strine joked that “M&A people always see the bright side of things.”

 But Strine questioned the rationale of companies doing deals, taking on more debt and “still building on the mountain of debt we already have.”

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