Jefferies Group LLC will merge its junk-rated loans and bonds business with the junk debt unit of its joint venture with MassMutual Financial Group, according to people familiar with the matter, in the biggest reorganization by a U.S. investment bank since the leveraged finance markets seized up last year.

As a result, Kevin Lockhart, global head of leveraged finance, and Adam Sokoloff, global head of sponsors, have left Jefferies, the sources said, asking not to be identified as the moves have not been announced.

A spokesman for Jefferies, a unit of Leucadia National Corp, declined to comment on Saturday. Sokoloff did not respond to a request for comment, and Lockhart could not be reached for comment.

Banks have had trouble selling debt related to leveraged buyouts since late last year. Junk bond markets seized up on concerns about the prospect of higher interest rates, the health of the U.S. economy, and how those two factors would affect companies with the shakiest financial footing.

In November, Jefferies and other banks failed to successfully syndicate the financing provided to Carlyle Group LP for its $8 billion acquisition of Symantec Corp's data storage unit Veritas.

According to the people familiar with the matter, Jefferies’ leveraged finance business will be combined with the junk debt origination team of Jefferies Finance LLC, the joint venture between Jefferies and U.S. life insurer MassMutual.

Jefferies’ management presented the changes internally as a way to boost efficiency and focus on clients, rather than a response to troubled deals, the sources said. It was not immediately clear if the combination would offer Jefferies more financial resources to increase lending.

Lockhart has been replaced by James Walsh, Jefferies' global head of consumer and retail investment banking, the sources said. Walsh will also serve as chairman of consumer and retail investment banking, with John Tibe and Steve Tricarico named U.S co-heads of this group, the sources added.

Robert Fullerton, previously U.S co-head of sponsors, was named U.S. head of leveraged finance, according to the sources. The other U.S co-head of sponsors, Jeffrey Greenip, was promoted to global head of sponsors, putting him in charge of Jefferies’ relationship with private equity firms, they said.

The leveraged finance business of Jefferies and Jefferies Finance will continue to report to Ben Lorello, head of investment banking and capital markets, and Carl Toriello, president of Jefferies Finance, the sources added.

Jefferies had benefited from a U.S. regulatory drive that started in 2013 to curb the issuance of risky junk-rated loans, because the firm is not regulated by the Federal Reserve, the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corp.

Last year, Jefferies ranked second in league tables for leveraged buyout financing with a 7.8 percent market share, according to Thomson Reuters Loan Pricing Corp data. It barely cracked the top 10 position in the league tables just two years earlier.

But with a higher market share came more risk. Jefferies does not specifically break out revenue or profits for its leveraged finance business in its earnings reports. But its debt capital markets division, which includes leveraged finance, showed signs of weakness in the last fiscal year, ended Nov. 30.

Jefferies posted $398.2 million in net revenue in debt capital markets in that period, representing 16 percent of total net revenue. In fiscal 2014, that figure was $627.5 million, or 21 percent of overall net revenue.

Among the junk debt deals that Jefferies struggled to syndicate was Sycamore Partners’ $3 billion purchase of department-store chain Belk Inc and drugmaker Concordia Health Corp.’s $3.5 billion acquisition of peer Amdipharm Mercury Ltd.

Jefferies has stayed away from the largest leveraged buyout so far this year: Apollo Global Management LLC's $7 billion acquisition of U.S. security company ADT Corp in February.

The latest developments raise questions about Jefferies’ attempts to aggressively enter into riskier areas of investment banking and trading. Even after being acquired by Leucadia in 2013, Jefferies has kept its reputation for being scrappy and taking on business from which big banks might shy away.

During the fourth quarter of 2015, Jefferies said revenue from its bond trading business tumbled 83 percent, citing the anticipation surrounding the Federal Reserve's rate hike, the collapse in the global energy markets and reduced market liquidity.

In the third quarter, the bank was hurt by losses from distressed energy trading positions, which had totaled $90 million over the last nine months ending Aug. 31.