Best Path To Distressed Credit
What is the best path from undergrad to end up at a distressed credit fund/ credit hedge fund? I know RX is up there in terms of paths of least resistance. Any others? I have seen some fidelity researcher end up at places like Bain, Oaktree, etc
Regardless of whether from undergrad or not, I don’t think there’s a path of “least resistance”. There’s always going to be a good amount of resistance - you’re trying to optimize for easiest way to get into something that is known to be hard to get into. You can always go directly to a distressed shop, RX banking, private credit / direct lending shops, CLO / public credit platforms, levfin banking, M&A banking, merchant banking, private equity analyst programs, RX consulting, hell you could even go to law school or work at a credit rating agency or Reorg type service. The easier the role is to attain the more resistance you’re going to face trying to lateral / transition, so seems counterintuitive to think this way. Should instead just focus on learning everything that sets you up for the path and then just face the resistance head on because there’s no real way around it. Maybe if you have a dad or uncle in the business that would be the true path of least resistance.
Can you PM
Sure
Go for distressed product groups, which is under credit trading in S&T.
Does that get you to Investor Relations or actually being an analyst at a credit HF? Heard equites S&T doesn't do as well in exiting to L/S equities as IB, PE and ER, hence curious
Distressed groups are illiquid and take prop risk; they have desk analyst roles doing research into distressed/stressed credit opportunities which is a relevant skillset
For equities S&T, you're just not doing the requisite fundamental research into stocks, its top down, sales/flow oriented
1. If you're still in undergrad and haven't landed anywhere yet; don't put blinders on to other sectors. Good that you think you know what you like, but you may find other stuff along the way. Enjoy the journey.
2. If you can't land directly in a securities shop out of the gate; consider going into commercial/corporate banking and asking specifically to work on special assets. This is a very unglamorous side of the business and high-performing people generally do not ask to work there or stay very long if they are assigned to it. If you can get some hands-on experience working out problem loans and helping to determine recovery strategies (particularly for larger, private credits) then that is some of the most directly transferable skills to distressed credit. Learning how to read documents and pursuing legal actions. You could lever that into the next step towards distressed securities.
My significant other works in PIMCO's Private Distressed credit team and it seems most of them have a RX / high yield research background
If purely interested in distressed/credit funds:
1. Restructuring banking
2. Distressed desk sellside analyst sitting with S&T (firm matters i.e. GS/Citi vs. JPM)
3. Regular banking but focus on leveraging transactions (LBO / off the run HY offerings)
4. HY research
In this order. Also don't pigeon yourself into credit / distressed. This is coming from someone working in the industry for almost 10 years, keep your options open (and in that regard #3 / general banking is always a good way to see the whole gamut of post IBD options vs. doing #1 and accidentally pigeon holing yourself into this niche industry)
How about direct lending/private credit?
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