Jefferies Fixed-Income Revenue Plunges 56% in Slow MarketZeke Faux
Jefferies Group, the investment bank run by Richard Handler, said fixed-income revenue dropped 56 percent to $126 million in the first quarter amid fewer high-yield bond offerings.
Total revenue fell 34 percent to $591.7 million in the three months ended Feb. 28 from a year earlier, the New York-based company, which is owned by Leucadia National Corp., said Tuesday in a statement.
“We experienced a slow first quarter due to a tepid fixed income-trading market and fewer new issues in leveraged finance capital markets,” Handler, 53, and Leucadia President Brian Friedman, 59, said in the statement.
Wall Street watches Jefferies’s results for signs of how larger banks such as Goldman Sachs Group Inc. and Morgan Stanley will fare. Those firms report first-quarter results in April for the period ending March 31. JPMorgan Chase & Co.’s investment-bank chief Daniel Pinto said last month that the year was off to a “very strong” start and Goldman Sachs Chief Executive Officer Lloyd C. Blankfein said that his firm was seeing an increase in trading activity.
“The communication we’ve heard from the management teams is the first quarter is going relatively well,” Marty Mosby, an analyst at Vining Sparks in Memphis, Tennessee, said in a telephone interview. “The larger banks have more international trading, they’ll pick up some activity from that.”
Leucadia fell 3.4 percent to $22.97 at 12:03 p.m. in New York. Since the company acquired Jefferies in March 2013, the shares have dropped 13 percent, the fourth-worst performance among 85 firms in the Standard & Poor’s 500 Financials Index.
Jefferies said revenue at the investment-banking division run by Benjamin Lorello, 61, dropped 34 percent to $272 million. The unit has a “strong backlog,” Handler and Friedman said in the statement.
“Despite these results, and in view of an improving environment, we believe Jefferies’s prospects for the remainder of 2015 are good,” the executives said.
The fixed-income division also reported a decline in revenue in the fourth quarter after its distressed-debt trading business had mark-to-market losses. Johan Eveland, a co-head of the division, left the bank this month, a person with knowledge of the matter said.
Revenue from equities trading in the first quarter rose 8 percent to $203.5 million, according to the statement.
After Jefferies was sold to Leucadia, Handler was put in charge of the larger company, which also has interests in timber, energy and beef processing. He invested in HRG Group Inc., the holding company that has been distancing itself from former chairman Philip Falcone and in January, he bailed out currency-trading firm FXCM Inc.
Last month, Handler turned down a cash bonus for 2014 when the investment bank fell short of performance targets.
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