May 11, 2023

Hey Associate 2 in IB - Cov, I'm the WSO Monkey Bot and I am sad to say, but this thread is lonely, so thought I'd post in here to try and help out. Some potential topics that might help:

More suggestions...

Fingers crossed that one of those helps you.

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Can’t speak to IG since titles are a bit different. Fees are less for IG than HY.

In high yield, co-managers really don’t do anything if it’s done on a best efforts basis. Left leads will do most, if not all, of the work

Arrangement fees can range from 50 bps to 125 bps depending on company, size, market factors, deal complexity.

Co-managers earn their pro rata share of the deal (so 1-5% of the total fee pot)

Underwritten deals are more expensive. Generally 3-3.75% depending on security of the bond (secured vs unsecured). More expensive because banks are receiving fees for the bridge loan + bond and are taking balance sheet risk.

Usually don’t have co-managers on underwritten bond deals. They wouldn’t have a title if they are not Bookrunners.

Short answer, discussed above is they don't do much. Internal approval work by the juniors in levfin/credit/coverage/etc. 

They usually offer these titles to all the RCF/ABL lender banks as a "tip" for their support

This is also a way to throw coverage/M&A from the banks a bone too for other work they did that may not have resulted in a fee directly

Good question, I've wondered the same. To get the best allocation you go through the lead. Anyone that is placing an order all gets the same runs from every bank and has relationships with every trading desk. I'm not really sure the value of the other book runners other than its throwing them a small sliver to make sure their desk tries to be active in trading. Some deals will have 2-5 total banks, some will have like 10+...yet the lead is basically taking all the orders. Weird dynamic from the outside looking in. Like what work do non-leads do...they aren't preparing materials...taking questions from prospective lenders...sourcing differentiated its like...what would you say you do here....

This is pretty spot on, wish it wasn't. What happened to to helping the smaller guy lol... From SS perspective really depends on the relationship you build with your client, issuer(some have minority mandates that offer preferred allocations.), and what product were talking about. For Muni deals, we almost see all clients go with lead for those deals, but IG/ABS its more of a toss up. Tier 1s will always go with lead, but have seem them throw some unique orders here and there to help out a brotha out. Non-leads help grow the book, get the deal out there, leads like to add smaller/minority firms because lead/issuer's might have mandates ("looks good"). Somebody in capital markets might be able to answer that question better, but I would have to assume this is the reasoning. 

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