Loan Syndiation under Investment banking arm
Hi,
Can anyone provide any information on what the Loan syndications team that are housed within the Investment banking arm of a bank (Lev Fin) do? Speficially, a place like Barclays. It seems quite interesting but I have no idea what the work involved nor the differences between it and other Loan syndications group (eg. some groups are in DCM, some are in Lev Fin etc.). Do they get involved in any complex modelling? Any info helps me out alot. Thanks :)
Loan syndication is a fancy way for banks to name their corporate revolvers division.
These groups typically focus only on pro rata deals, and typically focus on the IG space.
You won’t do complex modeling, but you will get sweet wlb. It’s a great gig for someone who wants to be in front office banking but has zero interest in grinding.
Any more info about bonus range and exit opps?
Just landed myself a SA in loan syndication
In my time, loan syndication junior got the same base as other groups with slightly lower bonus. The pay delta really started to widen at the post associate level.
However, I also noticed the turnover in these groups was much less.
So I think this is a decent place to get some internship experience or start your career. And like I said, it’s a very cushy job. You may not get crazy m&a type bonuses, but you’re not going to ever be pulling an all nighter to close a new rcf for a triple B client.
I work in a syndications group at one of the consistent top balance sheet BBs and can weigh in.
I echo what was stated above, but would add that another big piece of the job (at least at a place like JPM/BofA/Citi) is acquisition financing. Many times in an acquisition the target company will require the buyer to obtain “committed financing”. This often comes in the form of bridge facilities or underwritten term loans. Basically these are interim credit facilities that are provided to ensure the Acquirer can pay for the acquisition. These facilities are then terminated once the acquirer puts in place permanent financing to pay for the acquisition (bonds, equity, etc).
Before announcement, these interim bridge facilities or term loans are provided by “initial underwriters”, typically 1 or 2 banks, and then syndicated to other lenders. The initial underwriters are paid handsomely for providing these large commitments and taking the risk that these facilities might not be able to be syndicated successfully.
This is the sweet spot for syndications teams and where they make all their money. In some instances, on really large blockbuster transactions, a bank can earn $100mm+ fees on a single transaction if they are the buy side M&A advisor, initial underwriter on the interim financing (bridge facility) and also a book runner earning outsized economics on the permanent financing.
WLB is very good in a syndications group. As an Associate I am typically unplugged by 8 or 9 PM most night and rarely work weekends. I would note that this WLB goes out the window when a large M&A financing pops up, but you’ll typically only have a few of these each year.
Comp at the junior levels is the same as other product groups and coverage groups. My Ana1 all in comp was $170k and Ana2 was $225k. I also went A2A and was given a $40k sign on. At the senior levels, base salary is the same as coverage groups, but there is much less upside in the bonus category.
It’s a great career if you want to have a front office, client facing role, but don’t want to run yourself into the ground. It’s also more of a high volume / low touch job compared to something like M&A where you might only be working on a few deals at a time.
Thanks for your response, this explains alot. Could you please highlight the difference between the below:
-Corporate Banking (under Corporate and Investment Banking CIB strucutre)- From my friends who have intered in corporate banking CIB, they explained their role was identical to what was mentioned above. What would the difference be between a CIB Corporate banker and loan syndication analyst?
-Some in some banks, Loan syndication comes under Lev Finance, and in others it is in DCM. What would the difference be in these cases?
-What are some common exit opps?- No worries if you don't have a solid answer as I don't care too much for exits.
When you hear corporate banking, you should immediately think “relationship management”. Corporate bankers main responsibility is to maintain the relationship with a client at the Treasurer/Assistant Treasurer level. At this level of the organization, Treasurers and Assistant Treasurers are mostly focused on their companies cash position, so Corporate Bankers spend the majority of their time with clients talking about 1) cash management products 2) credit facilities which provide liquidity and 3) helping the Company meet funding needs via funded debt (term loans or bonds).
This differs from “investment banking”, where as investment bankers maintain the relationship between the bank and the client at the CEO/CFO level. At this level of the organization, the CEO/CFO are primarily focused on “strategic events”. These are primarily 1) identifying potential acquisition targets 2) identifying potential purchasers of their Company (if the Company is looking to sell itself) or 3) raising equity capital, depending on where the Company is in their life cycle. 3 is mostly unique to smaller growing company’s. Most large blue chip companies very rarely if ever issue public equity given its the most expensive form of capital.
So, the punchline is, Corporate Bankers focus on cash management products, credit facilities, and debt capital markets issuances with clients. Investment bankers focus on strategic activity and equity issuances. Corporate Bankers and Investment Bankers are the face of the banks they work for, and they then rely on their related internal product partners to handle the execution of whatever product they are mandated on (DCM = IG bonds & IG credit facilities, LevFin = high yield bonds and high yield loans, ECM = all equity products, M&A = M&A).
Now that that is out of the way, I understand your confusion between Corporate Banking and Loan Syndications. Revolving Credit Facilities are the corner stone relationship product between a company and a bank. Banks lose money on these but extend them anyways to position themselves for other ancillary business opportunities. As a corporate banker, when your bank is invited to participate in a syndicated revolving credit facility, you will be involved in writing up the internal capital/credit approval memos, basically justifying why your bank should participate.
Note that if you work in Loan Syndications, your team ONLY works on credit facilities which you have been mandated as the Left Lead Arranger and the Admin Agent. The Syndications team will be on point for structuring the credit facility and then syndicating it….they’ll be the one talking to all of the other banks that are invited and coordinating the process in general. That’s the difference between corporate banking and loan syndication.
To answer your question on Lev Fin vs. DCM, that is just a function of the credit ratings of the subject companies. Most banks will have 2 loan syndications team. One for Lev Fin that will handle loan syndication for Lev Fin clients. This is often referred to as the pro rata market. These are revolvers and TLAs that banks commit to. Then, there is an additional loan syndications team for Investment Grade clients, which sits within DCM. These are (mostly) all senior unsecured revolvers and some TLAs (not as common in IG as bonds have recently been cheaper than bank loans…mostly only see TLA in this space with M&A financing).
On exit ops, it’s really a toss up. This is not a technical job and there is no modeling experience. Most people that join syndications tend to want to stay for the long run, and there really isn’t a lot of turnover. I have seen people go from syndications other groups internally (DCM to cover bonds, LevFin, Investment Banking Coverage), but I’m not aware of any that have gone on to PE or HF.
Loan Syndications - wow lot of misinformation in this thread.
Correct Misinformation, Add-in Missing Content/Insight
"Loan Syndications" = For BB Banks, this may be just RC/TLA (Pro rata) & they separate TLB financing team to Lev Fin Capital Markets - but at other smaller banks, I've found this is not the case, and would generalize the BBs as being the exception. Loan Syndications at smaller banks manage loan financing across the ratings spectrum (IG/Lev Fin), marketed to both Bank & Institutional clients (TLA+TLB). Too small to separate teams, for one.
Naming convention Synonyms: Loan Syndications = Loan Capital Markets & Syndicate = Leveraged Finance Capital Markets (if non-IG) = Syndicated Finance = Syndicated & Leveraged Finance Capital Markets.
Now to correct the Rx guy @Smoke Frog weighing in on a space he's not in line by line
(1) "Loan syndication is a fancy way for banks to name their corporate revolvers division":
(2) "These groups typically focus only on pro rata deals, and typically focus on the IG space."
"you won't do complex modeling": You won't do complex modeling, but you will get sweet wlb. It's a great gig for someone who wants to be in front office banking but has zero interest in grinding.correct.
"you're not going to ever be pulling an all nighter to close a new rcf for a triple B client"
"It's also more of a high volume / low touch job compared to something like M&A where you might only be working on a few deals at a time." -
"Note that if you work in Loan Syndications, your team ONLY works on credit facilities which you have been mandated as the Left Lead Arranger and the Admin Agent"
"These are (mostly) all senior unsecured revolvers and some TLAs (not as common in IG as bonds have recently been cheaper than bank loans…mostly only see TLA in this space with M&A financing)."
"I have seen people go from syndications other groups internally (DCM to cover bonds, LevFin, Investment Banking Coverage), but I'm not aware of any that have gone on to PE or HF."
You sound unathletic
Is that a fact? Care to make it interesting? Find me someone more athletic on this forum. I dare you
5.5/10 shitpost trolling comment. You seem low energy. You could do better come on
I bet I can prove it. You know what a shuttle run is? What’s your time? I bet you spend your time playing with cameras
For those just tuning in, I just found out 30 sec ago this was my intern secretly trolling me. Speechless
What would be the primary differences in skill sets that one could obtain in corporate banking vs syndications? According to the explanation above, seems like corp banking offers more opportunity for learning the technicals (writing credit memos, spreading comps etc) vs syndication just coordinating the process. I originally thought because syndications is still "IB" and CB is relationship mgmt, exits from the prior would be easier. Please correct me if I'm wrong!
How hard would it be to switch from CB relationship management/coverage to Syndications (Bank loan/RC syndications)?
If you don't mind me asking, why would you want to make the change?
Better comp and easier work
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