Leveraged Finance Groups' Hours Across Street

Lev Fin seems to be one of the more variable groups I've heard in terms of average days. Specifically speaking, how do hours compare between BBs vs. Elites vs. Boutiques?

Obviously the days are much slower than a DCM group but nature of the companies you advise could cause you to be in the office until 4AM.

In percentage terms, what would the consensus be for the amount of 85+ hr weeks you will work in Lev Fin?

 

I worked as an analyst, up to Sr. VP in Lev Fin - first at a mid-size bank, then at 2 BB firms. I had first started my career in M&A at a BB so I have a good sense of comparing the 'brutality', if you will. I would say that Lev Fin is on par with M&A as having the most grueling hours. The reason is really the client base. If you're working in Lev Fin your clients are predominantly PE firms and they are (obviously) the most demanding, time sensitive clients to deal with. As far as the specific question of the difference in hours for lev fin at BB vs Boutiques, I have to say that most boutiques are not really in the business of Lev Fin (if you are talking about the Evercore, Lazard, Centerviews of the world) -- lev fin requires a significant amount of capital, hence the boutiques don't play a large role in that market...but I will add that the hours at the mid-size bank were somewhat better than the BBs simply because BBs have much more flow/volume of deals and the mid-size banks can only commit so much capital to be a real player.

 
mse13:

I worked as an analyst, up to Sr. VP in Lev Fin - first at a mid-size bank, then at 2 BB firms. I had first started my career in M&A at a BB so I have a good sense of comparing the 'brutality', if you will. I would say that Lev Fin is on par with M&A as having the most grueling hours. The reason is really the client base. If you're working in Lev Fin your clients are predominantly PE firms and they are (obviously) the most demanding, time sensitive clients to deal with. As far as the specific question of the difference in hours for lev fin at BB vs Boutiques, I have to say that most boutiques are not really in the business of Lev Fin (if you are talking about the Evercore, Lazard, Centerviews of the world) -- lev fin requires a significant amount of capital, hence the boutiques don't play a large role in that market...but I will add that the hours at the mid-size bank were somewhat better than the BBs simply because BBs have much more flow/volume of deals and the mid-size banks can only commit so much capital to be a real player.

I was wondering, can you comment on High Yield and Loan Capital Markets groups under Leveraged Finance? Thanks

 
Best Response

Sure. Lev Fin Capital Markets is a different animal at different firms. First off, some of the mid-size firms that have lev fin groups do both the origination/execution and capital markets work (like the mid-size bank I worked at). The structure even varies at some of the BBs -- when I went to one BB, they first had separate Loan Capital Mrkts and HY Cap Mrkts Groups and then they combined them into "lev fin cap markets"...as it relates to the work/hours compared to lev fin originations there are a couple of differences. First, the lev fin origination bankers are client/issuer facing, whereas the cap markets bankers are investor facing -- the groups will meet when discussing the deal, with the origination bankers discussing what the issuer is looking for and the cap markets bankers telling them what investors are willing to take (in terms of structure, size, leverage, etc). Second, the cap market bankers work hours that are more tied to the market -- they get in a tad earlier and also leave earlier than the origination bankers. A final note: the lev fin cap markets bankers (at least past the analyst level) do not have to do as much weekend work as lev fin origination bankers (unless it's a deal launching mon/tues, special situations like M&A related financing, etc)....hope this helps

 
mse13:

I worked as an analyst, up to Sr. VP in Lev Fin - first at a mid-size bank, then at 2 BB firms. I had first started my career in M&A at a BB so I have a good sense of comparing the 'brutality', if you will. I would say that Lev Fin is on par with M&A as having the most grueling hours. The reason is really the client base. If you're working in Lev Fin your clients are predominantly PE firms and they are (obviously) the most demanding, time sensitive clients to deal with. As far as the specific question of the difference in hours for lev fin at BB vs Boutiques, I have to say that most boutiques are not really in the business of Lev Fin (if you are talking about the Evercore, Lazard, Centerviews of the world) -- lev fin requires a significant amount of capital, hence the boutiques don't play a large role in that market...but I will add that the hours at the mid-size bank were somewhat better than the BBs simply because BBs have much more flow/volume of deals and the mid-size banks can only commit so much capital to be a real player.

Thank You for this. Could you comment on those banks (exlcuding elites like: Blackstone,Laz,Evercore, Roths) which have an RX team under their Lev Fin group?

How are those hours?

Here to learn and hopefully pass on some knowledge as well. SB if I helped.
 

well, its kind of odd because, again, different firms might have a RX group that is technically housed under lev fin, but other firms the RX group could be its own group. At one BB for example, the restructuring team sat right next to the lev fin group but it wasn't really all that integrated...in many ways it's really a specialized skill set to focus on RX and not every lev fin banker has the chops for it (they should since it could be a credit they structured that has gone sour) but whenever you're talking potential chp 11 restructuring and the bankruptcy/reorg process you really have to understand the different creditor committees, be REALLY good with the documentation and so forth....I thankfully only had one deal (maybe 2) I worked on where the issuer ended up needing restructuring - whether through a distressed exchange or a formal court re-org...I didn't enjoy it as much as 'pure' lev fin because those restructurings can take eons (hell, Tribune was in Chp 11 for years!) and it is really cumbersome...but to specifically answer your question: in terms of hours I would say any group that falls under the lev fin umbrella is going to be working as hard as the other guys -- but I can't speak to the independent RX groups since I never was in one...

 
HarvardOrBust:
BusinessGreek:

Although I'm sure you don't want to rference your actual previous employer, could you comment on who some of the middle market / mid-size players are in the lev fin space?

Jefferies, GE Capital, RBC

beat me to the punch...I took too long -- but yeah, those are 3 of the key players
 

Sure: Jefferies, some of mid-sized European banks (SG, BNP -- historically one of the "biggest" players in middle market lev fin - as in their focus client base, Credit Agricole), some of Canadian banks (RBC -- which has done amazing job over past couple of yrs in upgrading their entire i-bank, and especially in lev fin; BMO, TD Securities), CIT (lev loans only), GE Cap (& GE Antares) (lev loans only - but a huge MM player), SunTrust Robinson Humphrey, PNC Capital, RBS Citizens, NXT Capital (lev loans only), Macquarie, KeyBanc Capital Markets, Fifth Third Bank, Bank of Ireland, Golub Capital (lev loans only), Madison Capital (lev loans), Monroe Capital (lev loans only), etc -- I should point out that some of the names you might not be familiar with (the Monroe, Madison, NXT, Golubs, etc) are part of a fairly good-sized group of purely middle market lending platforms that grew out of the credit crisis when the bigger banks were constrained and had to somewhat disregard middle market companies and sponsors since they could barely deal with the larger fee clients and capital they had tied up in massive deals for those guys....

 

What are careers like at RBS Citizens and PNC type places? Is it a good place to learn and move to a larger platform or mezz lender, is it hard to exit or just a good place to build a career? I would think they pay a lot less than bigger places, but lifestyle is decent?

 

I apologize for the delay in responding to a couple questions - somewhat limited on time right now but I'll try to help as best I can. As it relates to exit opportunities in Lev Fin Cap Mrkts: the bottom line is that the opportunities are much better than DCM (in my experience both personally and with former colleagues of mine) -- and it really has to do with the complexity of lev fin vs structuring boring investment grade bonds (no offense to anyone who works in DCM but you guys work on rudimentary crap, plain vanilla, T+ nothing deals) -- lev fin cap mrkts, like lev fin originations, involves a lot more quantitative analysis, market analysis and smarts. I have been on both the cap markets and originations side; I have seen guys in cap markets go on to asset management (former co-worker of mine who was a great LFCM banker is now working at the most prestigious PE firm in asset management), I have also seen guys go work elsewhere on the buyside in portfolio management and even trading HY bonds/lev loans -- LFCM guys (and gals) also have much better latitude to move around internally or externally to other parts of the i-bank: some go work in liability management (tenders/swaps/exchanges, etc), others could join the HY sales desk (very easily since they already know all the investors)....long story short: I am of the opinion that LFCM opens a lot more doors than DCM (and yes, HFs are also a possibility) -- to the first question about careers at places like RBS Citizens, PNC Cap: the quick answer is that middle market volume has not picked up nearly as much as the rest of the market -- the other issue is some of these MM players (with exception of some of the top MM players like GE, Jeff, RBC, CIT (to an extent), BNP - despite issues in euro zone) are starving for more deal activity right now as well as increased competition from the slew of specialty lending platforms that popped up (as I mentioned) -- and even the big PE firms have set up special mezzanine/sub-debt platforms focusing on the MM -- so its a bit iffy at the moment -- I would say they do tend to pay less (I mean an RBS Citizens type shop) and the lifestyle is decent (but it does vary) -- given whats going on at the big firms right now I would say that lateral moves are more difficult in this environment (definitely can go from MM to MM firm but as everyone knows the large firms are still in firing not hiring mode -- they still need to hire new analysts and associates because they can't keep existing analysts in the same seat forever but they are just doing it in much less volume and are being more selective than ever)...I hope this helps -- if clarification needed / addl questions pls feel free to ask and I'll try to respond when I can...

 

The High Yield market has changed since 2013 significantly, it has become ever more commoditized. Lending is playing a more significant role, hence, you see some balance sheet banks being better represented like Wells Fargo in US or BNP in Europe. This is particularly true for frequent, BB rated issuers. Single B rated issuers still require some "skill", but I mean it's far from rocket science.

You need to differentiate between single B deals where the business is owned by a sponsor (Apollo, KKR, etc.) or truly private. If it is the former, then the sponsor will tell you what to do anyway, this isn't their first rodeo. They will also give you their template for documentation. It is true DCM is as plain vanilla as it gets, but HY Cap Markets or whatever people call it at their bank (LevFin Cap Markets, Syndicate, etc.) can join the DCM crowd too soon. Actual credit analysis and modelling tends to be done by LevFin/Sponsor coverage groups, sometimes IBD will hold pen on model anyway. So, all-in-all, your LevFin (junior) banker is a process monkey.

Doing DCM is pretty limiting in terms of exit opps, but so is Cap Markets. Get ready to be pivoted into cap market roles at the buy side where, for example, Apollo has its own Cap Markets desk to execute the many deals they do. Because that is what you have been doing: executing deals. It is better to be part of or associated with a coverage group where some modelling at least is done which then allows you to exit into credit funds, sometimes PE or whatever else you can think of really. 

What hasn't changed are the hours which are still as "bad" i.e. 80-100 hours (probably more 80) with weekends usually off. But it is also tied to market activity, so if markets are hot, prepare to be staffed on many deals. That said, when markets are down and your group needs to still make some sort of arbitrary budget, prepare to get staffed on expedition projects and other turning-the-stones type assignments...

 

I'ma ssuming that LFCM differs from a pure distribution desk that basically just helps build the book on syndicated loan deals, correct? My understanding of the distribution desk is that there is little to no analysis, and it's really just a sales / relationship role...

Alternatively, the capital markets function is actually much more involved / analytics heavy, which is why the exit opportunities are much better... And finally, the origination team itself (if it's a separate function) may be the most modelling-heavy.

Is that about right? I know idifferent banks split it up differently, but wanted to make sure I've got it straight.

 

Well, what you call the distribution desk I would call the sales team (desk) -- the HY sales and Lev Loans sales teams are really doing exactly what you said: they are calling on the investors to market the deal and see at what level/price and for how much of the deal they might be interested in and someone on the sales team is really only as good as the depth and extent of relationships with investors -- they will split up accounts among the different members but it usually starts that they are hired because they have long-standing relationships with specific institutional investors -- they are not doing the pre-deal launch work that LFCM is doing in gauging investor appetite for a particular credit and assessing what the deal structure needs to be to get sold (and keep in mind that before the deal is announced its obviously confidential so the market analysis LFCM does is on a no-names basis). They might engage with a handful of accounts and ask what types of credits they are buying and what types of structures they are looking for -- from that, and the quant work on comparable deals, analysis of how different industries are performing in the bond market they try and calculate what is and is not possible for the potential deal in question. The sales team is usually not informed of the deal until a day (with some exceptions for staged-transactions; usually involving larger merger financing where there are multiple rounds of syndication) of or day before, when we would present them with a sales memo (effectively talking points about the issuer and sponsor (if a sponsor is involved), the purpose of the transaction, the terms that have been determined by the joint effort of LFCM and originations (which will 95% of the time get tweaked to at least some degree once the deal is launched based on the feedback from the investor calls that the sales team makes) why the deal is wonderful and great and answers to diligence questions that we expect the sales team might get from potential investors -- which the sales team never reads and I would usually get a call from someone on the desk saying "XYZ account has some diligence questions regarding this credit, can you get on the phone with him and answer them?" - but to be fair I did encounter some really good sales guys/gals who wanted to get into the weeds of the deal and understand / be prepared for questions....in summary: what you said is accurate

 

Following up on this, I'm curious as to how internal mobility is at the banks. For example, if one worked in a HY / Lev Loans distribution (or as you call it here, Sales) role, would they be able to make their way to the Capital Markets side or to Originations?

Obiously depends on how good you are at networking / relationship building, but I'm curious as to your thoughts given your fairly extensive experience in Lev Fin...

And thanks for all of your answers, really appreciate getting insight from informed people!

 

It does really depend on how far one is looking to move internally -- and by that I mean, what's your starting point and where do you want to end up? If you're starting in the back office in trade settlements or operations, making your way to the front office is obviously going to be a more 'nuanced', longer climb...Addressing specifically (within leveraged finance) going from sales/distribution to cap markets -- if you are younger (analyst, etc) I think you need to have identified your end goal early on. You need to be sure you are doing the job you've been hired for extremely well and develop a great rapport within the sales team and the people you are reporting to...you do need to network well with the other groups but your best advocates and easiest means of moving will be your group heads (so it's a combination of both). If you do an excellent job for the sales team, have a stellar review under your belt and have developed that rapport internally than people are going to want to help you. You need to be tactful along the way and that's why I stress a combination of both your networking efforts and the job you do for your initial group -- you never want to give the group you are working for the impression that what they do isn't satisfying, challenging or rewarding -- its about being a well-rounded finance professional and your desire to have a diverse set of skills and experiences (at least that is one way of being tactful about it; in different settings it can vary but that's the idea)...

 

within investment banking they have their debt capital markets group (about 60+ bankers) -- they are strong as it relates to first time HY issuers and they are currently involved in a handful of high profile deals - (they are providing some committed financing for Icahn's proposed recap plan for Dell) -- generally speaking they are fairly solid when it comes to lead-left HY bond deals (but again, they usually bring to market first-time issuers). They aren't going to displace JPM or BAML anytime soon at the top of HY bonds and lev loans but they have a very good practice in leveraged finance for a smaller sized investment bank (their merger with Leucadia gave them access to an expanded balance sheet which is crucial when it comes to lev fin). Under their fixed income division they also house "Jefferies Leveraged Credit" which operates the HY sales and trading operations, research, etc - around 50+ bankers...I can't speak to the hours but I would imagine that like any active bank in lev fin the hours are on-par with the major firms (lev fin is always going to be among the most brutal, current credit market conditions being the caveat across all firms as HY/Lev Loans have cooled off significantly since the Fed indicated "tapering" of QE3 and treasury rates have gone up)...

 

Damn, good information all throughout the thread from exadbnker. Gave you an SB for your troubles.

Could you talk more about how price talk is determined for a leveraged loan? How do they come up with OID, spread, LIBOR floor? And then how is final pricing determined? (What causes changes from price talk to actual pricing, besides interest rates changing?)

 

I am 5 months into my 6 month internship in leveraged loan syndication (or LFCM, as described above, or another common name is sponsor-driven loan syndication) at a IB in Germany and exADbnkr13 is right on the money with this.

What I do (amongst other things): -market analysis -company analysis (going through the whole DD package) we have to know about the company to be able to talk to investors about it.... -preparing comps -together with origination, preparing pitches -preparing underwriting opinions for internal credit commitees (seniors who ultimately decide if we are going to finance the deal and up to how much we want to underwrite)

 
total:

Damn, good information all throughout the thread from exadbnker. Gave you an SB for your troubles.

Could you talk more about how price talk is determined for a leveraged loan? How do they come up with OID, spread, LIBOR floor? And then how is final pricing determined? (What causes changes from price talk to actual pricing, besides interest rates changing?)

I'm sure exADbnkr13 will give a better response, but I'll give it a go.....

Keep in mind that in Europe, banks dominated the leveraged loan market, while in the US, institutions dominate it.

There are many factors that come into the pricing of a loan, but to name a few:

-how liquid the market is and what kind of appetite is there for the credit/company, simple supply and demand, and risk vs. reward -what kind of leverage/debt package is the company willing to take on, equally, what kind of equity is the sponsor willing to invest -corporate and facility ratings (generally important, but mainly for institutional investors) and, and, and.......

OIDs and Floors are just sweeteners, they make the credit more attractive. The price talk is usually a spread of around 50bps (atleast in the EU market), which is the initially an "expected" price range. Final pricing is determined when the bookrunner(s) have agreed on pricing with the sponsors, which in-turn means that the bookrunner(s) believe they can allocate and sell tickets to the syndicate.

Google or look around on WSO for a link to "A Syndicated Loan Primer" by S&P, which will give you the basics...

Hope this helps!

 

I don't know if this site allows me to add links but I will try:

http://www.leveragedloan.com/primer/

(if nothing else just copy the site address) -- this is the leveraged loan primer that borby mentioned above -- Steve Miller (the author) is among the most knowledgeable journalists covering the leveraged loan market -- he and Marc Auerbach run the definitive news service for leveraged finance, S&P's LCD News -- if you work in lev fin, you get LCD News -- its probably one of the first things you do when you join -- you have your admin add you to the firm's account (and if you're senior enough, you have LCD News put out a story about your hiring)

the one thing I would correct (or modify) in the comments above is that in the U.S. market the price talk is not a spread of 50 bps (especially when LIBOR is only around 30 bps) -- for a loan to even qualify as leveraged the LIBOR spread is a minimum of ~150 bps -- in the current market (U.S.) issuers usually have to add in a LIBOR floor (1 - 1.25, less for BB issuers) -- although the levels have come down from last year and with an expectation of (eventually) rising rates (Fed Funds, not treasuries) the need and demand will lessen...and the bottom line is that all-in pricing (whether considering just a straight LIBOR + spread, or with a floor and / or an OID) is determined by the quality of the credit itself (is it a well-known issuer, what's the purpose of the loan - div recap?, straight refi? M&A? LBO?, ratings, etc), comparable credits (same industry, similar cap structure / leverage profile), and the overall loan and credit market conditions -- if the issuer is pushing the boundaries of leverage given current conditions investors will push back and perhaps either ask for a wider spread, maybe additional covenants (perhaps the issuer was at first seeking a covenant-lite loan), an OID -- especially if the issuer has existing loans trading that are not being refinanced you may see OIDs come into play as investors look to the relative value between the issuer's debt...

 

I think we have 2 different definitions of "spreads". I meant it as a the "spread" of the initial pricing....i.e. somewhere between 400-450 bps, but maybe I am just using the wrong term. Comparing to the "Hay" days or Lehman times, I don"t think pricing have/will ever get down to 150 bps....

I wish my bank would give me access to the LCD US news, but unfortunately, that is out of our "world" considering we only do EMEA. It would be great to read about how the market is in the US.

 
exADbnkr13:

within investment banking they have their debt capital markets group (about 60+ bankers) -- they are strong as it relates to first time HY issuers and they are currently involved in a handful of high profile deals - (they are providing some committed financing for Icahn's proposed recap plan for Dell) -- generally speaking they are fairly solid when it comes to lead-left HY bond deals (but again, they usually bring to market first-time issuers). They aren't going to displace JPM or BAML anytime soon at the top of HY bonds and lev loans but they have a very good practice in leveraged finance for a smaller sized investment bank (their merger with Leucadia gave them access to an expanded balance sheet which is crucial when it comes to lev fin). Under their fixed income division they also house "Jefferies Leveraged Credit" which operates the HY sales and trading operations, research, etc - around 50+ bankers...I can't speak to the hours but I would imagine that like any active bank in lev fin the hours are on-par with the major firms (lev fin is always going to be among the most brutal, current credit market conditions being the caveat across all firms as HY/Lev Loans have cooled off significantly since the Fed indicated "tapering" of QE3 and treasury rates have gone up)...

Do you have any additional insight into the Jefferies Finance LLC group as it relates to rep, culture and hours? I understand that that group is related but from what I've heard I can't tell if thats back office or a product group or what.

 

Sure - Jefferies Finance is (and this is a tad odd for Jefferies to have this) a middle market lending platform -- they structure CLOs (so they are investing in loans) and offer senior loans to middle market companies -- they are one of the 'specialty middle market finance platforms' I think I mentioned earlier on in this thread - I would technically call them a commercial-finance company but effectively it's the same idea as what NXT Capital and Madison Capital do (they structure a CLO and provide secured financing to middle market companies -- the investors in the CLOs are effectively investing in the underlying loans that Madison/NXT makes) -- Highbridge Capital (which is a hedge fund) recently announced a new $3 billion fund which will provide secured debt to MM borrowers -- again, same idea -- these companies are not your classic investment banks, they are hybrid asset management / lending platforms that focus on the MM...I believe Jefferies Finance is a 50/50 joint venture between Jefferies (the investment bank) and Mass Mutual -- this is not uncommon - Carlyle for example, has an unending appetite for buying MM lenders -- they bought Churchill Financial (and effectively turned that middle market bank into their recently launched BDC) and in April they bought Duff & Phelps which does have a middle market i-banking unit...Ares Management has a joint venture with GE Capital, again to provide lending to middle market companies (GE Antares is the vehicle)...and so on - to try and answer your question specifically: it's a separate entity but a real product group (as I have described above) -- as far as I can tell they have structured at least 2 CLOs and also issued $500 million in high yield bonds (for the entity itself, to fund general corporate purposes, etc) -- I can't tell you I know much about their reputation but I can say I would not label them one of top middle market platforms -- there are other, more established middle market banks and a host of specialty funds -- but they do have the "Jefferies" name and backing going for them...

 

RBC, RBC, RBC -- if you have a choice between the two I am telling you you have no choice: you go with RBC...during the crisis they effectively dumped most of their i-bankers and brought in upgraded talent that had been purged from bulge bracket firms -- and they got MUCH better, especially in lev fin and LFCM -- while I still call them a MM bank, the truth is they have done extremely well in moving up the league tables -- I mean they work on some big deals (maybe not left-lead but they are a real, legit player now) -- look, I don't know much about KeyBanc's group but I can tell you that they are truly MM only and I don't believe they have high-yield capabilities, only lev loans (I would be shocked if they have a HY desk) -- but I do know about RBC and I can't stress enough how much they overhauled and improved their i-bank -- they probably did the best job among all mid-tier players in taking advantage of the talent on the street to improve their firm

 
exADbnkr13:

Sure - Jefferies Finance is (and this is a tad odd for Jefferies to have this) a middle market lending platform -- they structure CLOs (so they are investing in loans) and offer senior loans to middle market companies -- they are one of the 'specialty middle market finance platforms' I think I mentioned earlier on in this thread - I would technically call them a commercial-finance company but effectively it's the same idea as what NXT Capital and Madison Capital do (they structure a CLO and provide secured financing to middle market companies -- the investors in the CLOs are effectively investing in the underlying loans that Madison/NXT makes) -- Highbridge Capital (which is a hedge fund) recently announced a new $3 billion fund which will provide secured debt to MM borrowers -- again, same idea -- these companies are not your classic investment banks, they are hybrid asset management / lending platforms that focus on the MM...I believe Jefferies Finance is a 50/50 joint venture between Jefferies (the investment bank) and Mass Mutual -- this is not uncommon - Carlyle for example, has an unending appetite for buying MM lenders -- they bought Churchill Financial (and effectively turned that middle market bank into their recently launched BDC) and in April they bought Duff & Phelps which does have a middle market i-banking unit...Ares Management has a joint venture with GE Capital, again to provide lending to middle market companies (GE Antares is the vehicle)...and so on - to try and answer your question specifically: it's a separate entity but a real product group (as I have described above) -- as far as I can tell they have structured at least 2 CLOs and also issued $500 million in high yield bonds (for the entity itself, to fund general corporate purposes, etc) -- I can't tell you I know much about their reputation but I can say I would not label them one of top middle market platforms -- there are other, more established middle market banks and a host of specialty funds -- but they do have the "Jefferies" name and backing going for them...

Thanks for the overview... how would the exit opps differ from a lending platform vs. a standard LevFin group at an IBank? Just curious because there seems to be a fair amount of opportunities currently available at these FinCo's....

 

You know the thing with these lending platforms is that since they tend to mix investment management with quasi-lev fin they usually want the associate-level hires to have some experience in buyside leveraged loans / credit -- now that's not a uniform policy across the board because these platforms are really so diverse (as I mentioned, one platform was a hedge fund, others are a mix of PE firms with MM direct lending/co-investment arms -- so on the one hand (if you can get into these platforms) you're very likely going to have a mix of buyside-type work as well as lev fin -- but on the other hand, that could also be the obstacle to getting onto one of these platforms in the first place -- generally speaking (since the MM has so many players now -- which is ironic because all these various platforms popped up because of a perceived lack of lending focus for MM companies as traditional investment banks were retrenching) -- there is actually pretty fierce competition for deals in the MM because you have these various platforms in addition to traditional MM banks like BNP Paribas, GE Capital, RBC, KeyBanc, SunTrust Robinson Humphrey, TD Securities, Macquarie (they like to think they're not middle market but they are not leading many large deals), BMO Capital Markets, M&T Bank, Fifth Third Bank, etc -- all competing for deals in a market where MM M&A has been nonexistent -- the other problem is -- because the return of the mega-LBO never actually happened you have firms like Goldman, Credit Suisse and UBS dipping down into the middle market to find deals as well -- so all-in-all, when once there were few, now there are many -- and the fee pool is already smaller when you are dealing with MM sponsors and companies (inherently smaller deals) -- long story short: in my opinion, its probably best to start at a standard LevFin group at an i-bank -- especially given current conditions, if you can land at an i-bank in lev fin, you're going to have greater flexibility on the other side (plus, as I mentioned, depending upon your experience, it may actually be more difficult to try and start off at one of these specialty platforms if you don't have investment management or PE experience)

 
exADbnkr13:

RBC, RBC, RBC -- if you have a choice between the two I am telling you you have no choice: you go with RBC...during the crisis they effectively dumped most of their i-bankers and brought in upgraded talent that had been purged from bulge bracket firms -- and they got MUCH better, especially in lev fin and LFCM -- while I still call them a MM bank, the truth is they have done extremely well in moving up the league tables -- I mean they work on some big deals (maybe not left-lead but they are a real, legit player now) -- look, I don't know much about KeyBanc's group but I can tell you that they are truly MM only and I don't believe they have high-yield capabilities, only lev loans (I would be shocked if they have a HY desk) -- but I do know about RBC and I can't stress enough how much they overhauled and improved their i-bank -- they probably did the best job among all mid-tier players in taking advantage of the talent on the street to improve their firm

Can you explain prorata facilities and who can invest in them?

 

Pro rata facilities are Revolvers (RC) and Term Loan A (TLa) that are syndicated to banks -- institutional investors do not buy revolvers -- inherently they are not in the business of providing revolving lines of credit (nor are they allowed to under most of their charters) -- furthermore, revolvers are not great investments -- banks provide them to get access to other capital markets business, treasury services / cash management, other corp fin work from clients -- it is illegal for banks to outright say or indicate that they are providing revolvers in order to obtain other (more profitable) capital markets business (it's called 'tying' -- and its illegal -- in other words, its unspoken but if a bank is providing a revolver commitment to an issuer they want and expect some other business to make up for it because revolvers are loss-leaders, banks don't make money on them -- but they can't say outright "hey issuer, I'll give you a $20 million commitment for your $200 million revolver being syndicated but I expect to be a co-lead on your adjoining high yield bond deal or your next high yield bond deal") -- TLa are sold to banks as well -- in rare cases you might see an institutional investor taking a piece but it is not at all the norm -- term loan a's can be issued for a variety of reasons -- it can (to very small extent) increase the overall yield relative to risk for banks when they take an accompanying piece of a revolver, it is also frequently used in the middle market if an issuer is doing a 'club deal' where there are only say 3 banks providing the entire financing, they can also be used when there is a large financing involved and the underwriters assess that institutional investors have appetite for $X amount of the financing and to fill out the funding needs a term loan a is incorporated -- since revolvers and term loan a's are priced lower than institutional debt, an issuer might shift some of the financing from institutional tranches (B, C, D, etc) to pro rata if it finds (via the underwriters) that there are more banks that want to participate (again, because the banks see the issuer as a potential high-fee generator in the future and want to be among the issuer's bank group going forward)...the name "pro rata" came about because the lead bank syndicating the loans would allocate the bank debt on a pro-rata basis among the syndicate of lenders...

 

You get to a point in your financial accumen, where you actually don't even say the word anymore... that is how the real professionals do it. The head's of Lev fin at most places usually just nod

 
Buyside <span class=keyword_link><a href=//www.wallstreetoasis.com/cfa-training-free-trial-learn-signal target=_blank>CFA</a></span>:
Finance is usually abbreviated to "Fi" - Re-Fi, Corp Fi. I stand by Fi.

Even in school it's called CorpFin classes. No one says Fi unless you're a hick talking about "ReFi"-ing your motorhome.

 

Depends on group structure. UBS Lev Fin is a banking group which includes Sponsors & Restructuring and had hours equivalent or worse than industry groups. Definitely will average 80+ hours with 100 hours weeks a regular occurrence. Some other banks have Lev Fin either combined with cap markets or setup like ECM/DCM and hours should be a bit less and Powerpoint almost non-existent.

 

Only know lev fin hours for the groups I had/have friends working in. On the whole, their hours are better than regular IBD usually, but you still want to diligence on a firm-by-firm basis

Barcap LA (technically not Lev Fin, but basically a Lev Fin group): 9-7 PM weekdays, almost never weekends

GS Lev Fin: 830-10 PM weekdays, probably 2-6 hours on the weekends.

UBS Lev Fin: Shitty deal compared to the rest.

-Advisor

Advisor Prime Academic & Corporate Interview Prep elitecollegeandinterviewprep.blogspot.com

Academic & Corporate Interview Preparation http://elitecollegeandinterviewprep.blogspot.com
 
bd78:
what groups in investment banking work the least amoutn of hours? LevFin, M&A and Healthcare are among the most right? Does anyone know who works the least?

Way too many variables. Workload is dependent on deal flow, group culture and the market. Back when there were barely any M&A deals the M&A teams would work the least while the industry groups were still stuck with pitchbooks.

 

Why ask that? Would you really want to join a team that doesn't have a high deal flow? I'd say if you want some IB exposure but not the hours, maybe the syndicate side would be better. Though you have to start earlier and you have to spend some nights out with clients

 

"Barcap LA (technically not Lev Fin, but basically a Lev Fin group): 9-7 PM weekdays, almost never weekends"

Barcap LA has sponsors and Real Estate banking. The sponsors group is probably more lev fin oriented than their new york counterparts, but it's a stretch to call it a lev fin group.

And to the poster above, Barcap Lev Fin has seen significant deal flow lately.

 

At Barclays, Capital Markets groups are part of the Investment Bank. The fact that LevFin is labled under the CM umbrella (which is under IBD anyways) doesn't actually change the role.

Both Barclays and MS don't have the balance sheets that Citi, BAML and JPM have, so that's were the role will be different.

That being said, I know someone that works at LevFin Barclays and the hours aren't as bad as coverage 8am to 10pm on average; less weekend work.

 
Dat Guy:

At Barclays, Capital Markets groups are part of the Investment Bank. The fact that LevFin is labled under the CM umbrella (which is under IBD anyways) doesn't actually change the role.

Both Barclays and MS don't have the balance sheets that Citi, BAML and JPM have, so that's were the role will be different.

That being said, I know someone that works at LevFin Barclays and the hours aren't as bad as coverage 8am to 10pm on average; less weekend work.

Some clarifications:

1.) Can confirm Barclays LevFin hours are very lax relatively speaking (8am - 10pm) and almost no weekend work. Also happens to have a LOT of A-to-A promotes and even A-to-A-to-VP promotes - not sure if this is a function of the sustainable lifestyle, or due to the lack of exit opps (since Barclays LevFin does not model).

One of them exited into Carlyle's Mezzanine Fund last year though, for what that's worth, but the general sentiment was that Barclays LevFin analysts tended to stay, for whatever reason.

2.) Not sure how you could classify Barclays as not having a Balance Sheet - it has $2.13 trillion worth of assets (FY2014) , which is larger than Citi's and a bit less than BAML or JPM. Just because its deposits are situated in Europe, doesn't meet it can't leverage it in the US. The fact is that Barclays is currently a balance sheet oriented bank, despite how its management is trying to re-brand itself as an "advisory-oriented" bank.

One FYI - Barclays LevFin in FY2014 and so far in Q1 2015 has been on fire. Ever since the regulators having been honing onto leveraged lending guidelines, majority of the BBs have pulled back - Barclays (for the better or for the worse) swooped in to aggressively grab market share from sponsor related acquisition financing (aka. LBOs). Who knows, maybe they'll get a warning from the Feds like CS did, but in terms of deal flow, Barclays LevFin has been doing very well as of late.

Source: conversations with 4 analyst/associates currently in Barclays LevFin.

I have no info on MS, and would like to hear from about MS LevFin from those with info.

 

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