Software BSL seat?
Hi guys, analyst 2 at a bank here with an offer to join a CLO for software BSL analyst role. I’m not as experienced in the market - does the current AI trend make software BSL analysts more valuable because they have to underwrite more hairy situations? Is software still a good BSL sector to cover for next 3-5 years? How should I think about it? Appreciate your insights!
Idk why anyone would want to take a pure BSL CLO seat at this point unless if you're at the one of the majors. BSL CLO analyst is the most threatened role out there after IG stuff due to AI. Santizied marketing docs & numbers with the banker cleaning up everything. I would think long and hard of where that gets you in your career. You should be a workout guy at a CLO. Forgive me if im wrong this is just my view, i'm in special sits.
CLO people think special sits people are just dumb tourists though, as they the CLO analysts are best positioned to hold industry views that generate alpha
If you have a HY/LL/Converts/Value Equity mandate sure, generating alpha at a pure play CLO with hold restrictions about as close to passive as it gets without being passive. Don't get me wrong you'll still need analysts but probably like 75% less if pure play CLO especially if a smaller one. Most CLOs also pay like trash anyway
generating alpha in CLO is about outperforming other CLO managers/funds (where MTM performance is live/widely available). not just pure total return or performance vs the index. don’t take this the wrong way but you’re wrong here. good analysts are hard to come by and it has a lot to do with risk/portfolio mgmt than just “picking winners” which few do consistently in reality. just my 2 cents
Thank you, super helpful. I heard senior analyst roles at large CLOs can be good value - how much do they pay? How can one get to a larger manager?
Shoot for non insurance co. owned Cos and you want a top CLO manager with scale. Thats how you get paid, i doubt boutique/smaller CLOs are gonna be around with fee compression and LMEs where they have no say. If you can also find a CLO in a tier 2 city it'll be a good lifestyle unless you get laid off. Again thats my view of the world and I could be wrong but I've been doing some hw on this.
i don't see why getting laid off from a clo seat would make it difficult to find a new one. it’s all credit analysis. not rocket science. a well trained analyst is a well trained analyst. strong talent is strong talent (regardless of strategy). hardo/nerds act like distressed is the only place where talent in credit resides but their performance in the last 15yrs says otherwise. i’ve seen ex-PE/restructuring guys make such terrible calls at leading shops on many occasions. it’s not that black and white
a BSL software seat in this market is a golden ticket in the age of AI
If we go back to the topic - are software BSL loans still investable?
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