Bonds (FI) Sell-Side to Private Credit: Is it possible?
Somewhat new to the PE thread so apologies in advance for potential lack of intelligence... Hoping for some experienced commentary on whether or not my sell-side lower MM bond trading experience would translate at all to private credit. I work on a desk of traders. Everything from FDIC insured certificates of deposit to unrated high yield/distressed credit and some convoluted agency and non-agency mortgage action. I'm getting front line experience, have tons of responsibility compared to others my age on the FI part of street, but really thinking about my trajectory and future earning potential at my current shop (non-BB).
Would it even be possible for me to jump to the buy-side in a private credit investing role? I'm interested in earning carry and looking at the industry from a different lens eventually.
If you need more info about my role, please do not hesitate to ask - I will provide as much color as possible
Thanks
Addressing the biggest Q first - what do you mean by "trading", i..e how close are you to doing proper credit analysis on issuers? Trading CoDs vs distressed / HY, in my experience are very dissimilar and I'm wondering whether the analysis is integrated in your work, or do you have desk analysts for the riskier names. If you were asked about a name on your CV, would you be able to hold a discussion on its key credit points? can you model confidently and quickly? can you hold a basic discussion of covenants?
At a junior level, and as someone who moved in the other direction (sell-side credit risk, lev fin to public credit), the focus for both public and private tends to primarily be on credit analysis and modelling - i.e. can you delineate key drivers and risks of a business, and are comfortable underwriting the credit (from there, there are additional elements like legal / covs / recovery analysis / depending on how far down the risk spectrum you want to go into - I would also highlight some knowledge of covenants as fundamental in private credit). Given the sponsor-driven nature of private credit generally, you may also want to highlight trading in HY names / LBO-ed new issues with a sponsor element, for some quasi-deal experience.
You may have known this already, but (re)-pointing out two things in that (i) the flavour of private credit will determine the excitement of your experience - i.e. being in a senior debt, sponsor-focussed shop is going to be different from a opportunistic credit shop, to a distressed shop, etc. - you may find that, in some roles, most of the information is given to you on a silver platter, which is different from public side (secondary trading, that is), (ii) the private side lends itself to more process-driven roles at a junior level - YMMV, but my experience has been that you don't get to call the shots until you can originate (VP-above typically), and even then you have to go through committee, vs some roles on public credit where it may be v quick to trade an idea and you can put ideas in book at a relatively younger age. Some food for thought in case you haven't thought about buyside in a public credit role.
Best of luck! See what other posters say and give it a shot - the results may surprise you.
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