Hey guys, was wondering if any of you have worked at a bank in corporate banking/sponsor finance could chime in. I recently lost my job at a CLO manager investing in broadly syndicated term loans and was thinking about switching to banking. The main negative feedback that I received was that I wasn’t coming up with enough trade ideas (a lot of my trade ideas involved waiting for a good entry point…) I went into another interview with a top tier CLO manager and got grilled on this aspect. I realized that although I really enjoy the initial diligence process and do enjoy coming up with trade ideas, the pressure to constantly perform and put in 70+ hour weeks stressed me tf out. I can put in the hours and the mental effort, but the uncertainty that my recommendation will pay off and that I would get fired kills me on the inside. Do you guys thinking banking (or something else in finance) would be a better fit for me? Thanks in advance.
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I think moving to traditional M&A might be a stretch (though not impossible). More likely you’d have success as a leveraged loan research analyst on the sell-side, or if you’re truly interested in getting into a banking role, in LevFin (helping issuers bring leveraged loans to market).
Hi, thanks for the reply. I don’t think my profile would be very attractive for IB - even leverage finance is a stretch since I’m competing against others with strong IB and execution experience. I would be so happy if I could land a role in Lev fin. I’m at the point that I’m just looking for a job that’s interesting that I can excel in. If that’s IB, credit research, or another high finance role… great! But I think I’m at the point where I’m questioning and every hiring manager is questioning if I can even cut it. I typically perform very strongly during case studies/financial modeling tests, but when I get to the final rounds… there’s a big concern about me getting fired. Just wondering what I should do next. It’s quite demoralizing. For context, I’ve been in the industry for 4 years across equity research and credit research.
Yeah go to the credit side of corporate banking or Levfin. If Levfin, you’ll probably have to settle for a lesser bank but who cares. Less stress but probably less pay. Maybe you could do private credit? I mean it sounds like you have good experience and even though it didn’t work out this time, I’m sure there are plenty of doors opened for you. Don’t sell yourself short.
Can you unpack a bit more what happened that led to your firing and the dynamics that made you skiddish about taking risk? The single best way to build confidence with making a recommendation and taking risk is to just do it and get some wins in; wins, in credit, is just return of principal + interest and worst case return of principal. Everyone has things that blow up or don't go according to plan. Even though you were at a CLO, was there a lot of pressure on mark to market? Would you put risk on, have it trade down some, and be frozen with what to do? It sounds like your concern on getting fired due to bad recommendations was a self fulfilling prophecy because it led you to just not do anything. Remember that we operate with an imperfect amount of information...all you can do is weigh what you know vs. what you don't know and do your best. It sounds like you just need to get more reps in and / or work at a place with maybe a better culture?
Can you unpack a bit more what happened that led to your firing and the dynamics that made you skiddish about taking risk?
I don't like recommending trades that I think won't make money. I.E. Many leveraged loans in my sector had 1-2 point spreads and that bid-ask was basically the "upside". Secondly, I disagree with pitching ideas just to gain visibility with seniors. I hate it when people waste my time, why should I waste their's. For context, ~90% of my portfolio traded near par, and outperformed the respective index last year. I didn't see a need to trade out of things that weren't broken, or trade into things that were already near par. I think I got skiddish because so many of my ideas got rejected by senior before going to IC. Also, one PM made me very nervous. idk why. He's not a bad guy. I was fine pitching to the other PM's, even one's on different teams.
Even though you were at a CLO, was there a lot of pressure on mark to market?
Yes.
Would you put risk on, have it trade down some, and be frozen with what to do?
No, I would recommend to buy more, and senior would say no. Eventually it would trade back up.
It sounds like you just need to get more reps in and / or work at a place with maybe a better culture?
You're probably correct, but I think my luck has run out.
Tbh, it’d be great if I could speak with someone who is or has been a hiring manager and talk though my story with them. I’m still very interested in this industry and have no problem working 70+ hour work weeks. If anyone is interested in helping, please PM or comment in response. Thanks!
What about corporate banking or direct lending?
That's what I'm trying to pivot into. Was wondering if I could get advice on best way to spin it.
DL is the exact same skill set.can spin it to say you want more engagement with borrowers and the potential to generate greater alpha
could you not just have thrown in ideas when a name gets a margin ratchet or downgraded and give the RV vs peers and HY
Vast majority of BSL's (in my sector) don't have margin ratchet. When names get downgraded, bid-asks typically react instantly. The RV becomes do you like this risk over another one. And given how slow ratings agencies are too move, CCC names that have turned around and are on the cusp of an upgrade are better buys. With that being said, the bid-ask on freshly downgraded BSL's are ridiculous, typically at least 2 points if not more like 4 points. So your relative value basically got eaten by the sell-side. Also, PM's definitely have a negative bias towards your recommendations if a name gets downgraded that you didn't recommend to sell. Typically the conversation after a name gets downgraded is - do we sell here? And the majority of the time, the answer is no. In fact I think it would make more sense to figure out when is the right time to buy it. Given how a CLO works, you're almost never outright buying a CCC.
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