CLO Exits?
Currently a generalist at a smaller BSL CLO manager post-grad. I am responsible for doing the modeling for the individual credits we look at (essentially FCF projection with debt paydown), credit analysis (assess credit docs, capital structure, relevant ratios), general business analyses (end markets, suppliers, customers, etc.), and then putting together memos & presenting to IC.
I am looking at a potential lateral to a MM or smaller boutique IB role, or going to a more brand name credit manager in a CLO role. Overall, my goal is to try to keep buyside options open while I decide on what I want to pursue. I wanted some insight in weighing the value of these potential banking experiences vs. a brand name in credit on my resume. What are the ups/downs in strength and range of exits? Much appreciated
Hard to say, from the people I’ve met CLO quality of experience varies wildly.
there are such a wide variety of roles in a CLO manager that you'll need to explain what you do for people to give meaningful feedback
I updated the post. Any further feedback would be appreciated. Thank you!
You want to go from a CLO analyst seat to an IB seat, smaller boutique at that?
Unless you really don't like credit, I really do not see any upside here. You're already on the buyside...one of two things are going to happen...1) your firm will do well and scale assets and you're there early, or 2) you're junior enough that transition to other roles at larger firms should be pretty easy. Seems to me like you have a pretty good think going on, not sure why you're trying to do a pretty big pivot.
Really appreciate that feedback. I hear your point. My confusion is regarding the range of exits from a strong CLO shop. Is private credit, distressed, or some level of PE in play? You just hear every buyside opportunity seeking a few years of IB so I assumed it would be a strong way to keep options on the table.
PE is out of the question. Liquid credit are most likely the next exit --> HY funds, SM HF, MM HF, large LOs.
People do banking to get your job. You are in the exit.
I’ve been job searching for about 2 years trying to answer this same question.
I started at a CLO/HY Opps fund in the Midwest. Currently, at a CLO fund in NYC, but still looking.
PE is almost completely out of the question. All the PE interviews I’ve had boiled down to “I just think it’s going to be to big of a jump from BSL credit to PE.” Unless you have a direct connection who’s willing to stick his/her neck out for you, you probably need to go to banking or get an MBA to break into PE.
Other CLO funds will be the easiest lateral, but the work you do at these funds can vary depending on the other types of portfolios you will be investing in and the size of the manager. Smaller funds (based on number of employees not aum) will likely give you a broader range of experience, while CLO chop shops, like GSO or Carlyle, will keep you mostly in the BSL lane. So know who you are interviewing for cause the required level of depth in a certain name or part of the capital structure can vary greatly.
Private Credit is going to be a bit harder. You will need to answer the questions “why private credit vs public credit?”
Credit focused HF’s will be an easy interview to get, but they want to know you’re more passionate about deep dives on individual names rather than being a mile wide and an inch deep like at most CLO funds.
Just remember, these seats are few and far between. With the increase in banking layoffs, the talent pool is saturated with guys/girls that can do the job.
This is helpful. Thank you. Do you have any insights to how CLO comp scales relative to credit HF or private credit? Do not think I have a great grasp of this
Good reply. I'd just add to make clear, the reason why PE and private credit are harder to make the jump is because they are fundamentally different jobs than public credit. The ability to analyze an investment is just a small part of the puzzle for these roles. PE much more so, but even private credit is very process intensive - managing consultants doing industry/QoE reports, talking with attorneys on legal docs and structuring (largely market driven its not like you're negotiating per se, but still involved overseeing), having a hierarchical team dividing and conquering more work streams. Whereas the role in liquid credit is almost entirely just analyzing a credit without all the other stuff. So if you're junior enough, making the case for private credit is likely a easy jump, but as soon as you're above the analyst and maybe even associate level, the skillsets are just completely different and thus why the jump is so hard. PE is way more process driven and thus the issues are even more pronounced.
Depends on the CLO fund, associate average salary is ~170 +/-20K. VP is probably 200-250. Bonuses scale a lot more as you get more senior. Analysts probably all in 200-250. Associates 275-350. VP/Director probably anywhere from 400-600. It depends on the firm and how they structure the team. The ideal career track is PM at a firm that will make you a partner.
Wow. This scales more then I thought.
This is not true. Source: worked at a top CLO manager and have interviewed across the street
Go check out the Odyssey comp report if you’re not convinced. These are nyc numbers. I can’t speak to other geos (except for the midwestern CLO manager I started at).
About to start as an analyst in a MF CLO shop. Before anyone says it, I know this is the exit. But just curious, what do people think exits could be in case I want to move down in cap structure? Special sits / SM HF out of the question? That would prob be what I’m aiming for if I were to leave
Ideally you'd try to transition to public credit (IG/HY/LL) and get some exposure to stressed/distressed (involuntary or voluntary). Direct to HF is hard. CLO analyst-level work is nearly meaningless compared to the level of analysis you do on the HF side. I've worked at CLO, distressed, equities.
Would actually disagree, not all clo shops are the same - clo is just a pool of capital but analyst experience depends way more on how the shop structures the analyst experience and how much weight they put on generating alpha from security selection vs. structuring. Also some shops will have a separate team for stress/distress, while others (and i believe most MF credit arms) will let the same analyst underwrite names the whole way through. Personally don't understand why shops will willingly bleed good talent by adopting the former model, but that's a topic for another time.
Know of a few shops with significant clo money that regularly do deep dives into names when they are concentrated - CLO managers at scale can easily pick up $100m+ position sizes when looking across CLO vehicles - or when names become stressed. In the public space reporting disclosure is pretty similar regardless if a name is stressed, performing, or publicly traded, so good CLO managers can often put together fairly detailed materials (ie. channel checks, mgmt meetings, full operating model build, etc.). Easiest way to find out which type of clo shop you are looking at is to just talk to the team and ask them how much work they do for their names. Exits will be commensurate with the type of analysis you do on the jobs.
Currently a CLO dealer on the sell side sitting in s&t. Interested in learning CLO modeling and conducting the deeper analysis - does anyone have any resources? My current seat only looks at the top of the capital structure and doesn't do much analysis at all. Would like to learn the more rigorous technical skills to open potential exits because I don't feel like I have any hard skills, but these resources seem difficult to find online as they're not as common/standardised as DCF/3-statement modeling etc. Has anyone faced a similar situation before?
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