I have equity investing experience and am trying to transition into a credit investing role. Specifically, I am trying to break into a public markets role focused on leveraged loans and high-yield debt.
Given I don't have a background in credit investing, I am trying to position myself as best as I can and come in with my own credit pitch on a publicly traded company.
I have done work on long/short equity pitches and was trying to find an example of a credit pitch. I recognize that a credit pitch for this type of role needs to focus more on 1) the ability to fully recover principal in downside scenarios and 2) relative value compared to other loans/bonds.
Does anyone have a sample credit pitch that they wouldn't mind sharing (please PM if you can't share below)? If not, any advice on how to structure a credit pitch vs. a l/s equity pitch would be extremely helpful.
Any help or comments are much appreciated!
Good place for ideas: http://www.distresseddebtinvestorsclub.com/
Credit pitch for something like HY is relatively similar to equity I imagine. If pitching on relative value, look at where complex or issue is trading vs peer and index (broad market and industry specific). Consider the downsides such as rating agency downgrades and propensity for acquisitions (bad for credit!) and forecast of credit metrics, and review covenants to make sure they can't screw you - which they most likely can (esp fallen angels), but you just need to figure out the odds and how badly (ie how that might impair your recovery, etc).
Thing with HY is that different credit situations can be extremely bifurcated; such as determining whether or not a company will survive (if not, if you have upside), or perhaps if you're just being adequately compensated for the risk.
To your point, recovering total principal isn't always the case, but that doesn't necessarily make an investment unattractive. If you buy a bond at 30 and recovery "value" after a reorg is 80, you still come out pretty well.
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