Kewsong Lee

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With coronavirus cases still spiking in areas throughout the country, and the US this week reporting a record second-quarter GDP slump, there’s a growing concern among borrowers and private-equity firms that cash raised in spring won’t be enough to ride out the economic fallout.

And Houlihan Lokey, Wall Street’s top adviser to distressed companies, has changed up its outlook: Instead of the sharp but quick downturn the firm initially anticipated, it’s now predicting a deeper, prolonged crisis that takes three to five years and pushes many more firms to bankruptcy.

“This pandemic is not a short-term blip, and it’s going to be something much longer and probably more damaging to the economy,” Houlihan CEO Scott Beiser said on an earnings call this week. And as Alex Morrell writes, companies that piled on debt in the early stages of the pandemic may have set themselves up to struggle as the crisis drags on.

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Source:: Businessinsider – Finance

      

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