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Also, does the DCM role require Series 7 License?
yes
bumpp
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Not looking to exit, just wanted to know what options I'd have if I decided to leave after 2/3 years as an analyst. Also interested on comp compared to other IB product groups.
I ended up accepting a DCM offer for a BB and asked a ton of these questions to numerous people before doing so. This may be a slightly long post but I'll tell you what I've learned.
It seems like buyside exits are atypical/opportunistic for DCM analysts (I'm excluding lev fin when I say DCM). They can happen but DCM analysts aren't targeted because coverage/M&A/LF get more relevant modeling experience. Most of the DCM exits I've heard of (to buy-side) are one-offs to hedge funds that traded the product you had experience with or maybe even MM PE. Basically: nobody goes to DCM for buyside exits, but they're possible.
I dont think it's "common" to lateral to M&A/LF/coverage after your second year, but it's possible and it's the most likely juncture for an internal move. You just need to have good reviews, have seniors in your group who will vouch for you, and have spots open in those groups.
I've also heard that many people join DCM eventually wanting to do IB, but end up so satisfied with the lifestyle and comp in DCM that they decide they want the stay on as an associate (and beyond). It might be hard now to stomach being in a less-sexy group but when you're walking out at 8pm every night before the IB guys even get their comments back (and youre taking home same range of comp) it must be a good feeling (yes, clearly some bias here, but it's the truth).
Where DCM gets a bad rap is two main things: 1) poor exits relative to coverage/M&A, 2) "simpler" work, not modeling intensive, etc. I've addressed the first point, so I'll adress the second. Many people say DCM work can be boring vs IB, and the reason for that is that most of the work is very process-oriented. You own a particular product, and most of the time it looks very similar. You're never reinventing the wheel, just tweaking terms and details based on who the client is. Where DCM makes up for this "monotony" is in exposure to the markets and faster deal flow (deals are faster and there is a higher volume).
To end this verbose post I just want to mention that I met a number of people in DCM that had actually left IB to join DCM. This surprised me as a college student who couldn't fathom leaving sexy IB for no-exits-DCM but it made a ton of sense: they said they DCM offered a far better lifestyle, less hours, little weekend work, more predictable schedule, more access to senior bankers, leaner teams, faster promotions, etc.. It all makes sense.
Note on comp: at the junior level it's the same as IB (at least at my bank), but the more senior you get your bonus takes a slight haircut vs your senior banker peers in IB coverge.
Happy to follow up on any questions the best I can.
This is spot on. One of my buddies from my analyst class moved to a DCM group (traditional DCM investment grade bond group) and loves it. After getting his ass beat in IB for a year he really appreciates the lifestyle. He got fast-tracked to associate and is clearing my comp with top-bucket bonuses haha.
Apparently the work flow is a lot faster than IB, a lot of "do it now" stuff pops up that takes 30-45 minutes throughout the day. Good amount of interaction with both traders and coverage bankers.
That said, he's in it for the long run. If you want to exit, it's not the best place to be and you should consider moving over to coverage as an analyst 3 if you don't see yourself staying in DCM
Damn, thanks for this post man! Seems like solid info... I have 2 questions: 1. Are you currently an analyst? Or is all of this coming from a SA experience/ talking to people in the industry? 2. I had read that at analyst/assoc level, base salary is the same as IB M&A for example, but I wanted to know what the typical bonus would be like. (I'm considering accepting a DCM SA Offer, but am still indecisive between DCM or M&A) I find both very interesting and love the fact that DCM is very market related.)
Incoming analyst so this is a mix of first- and second-hand knowledge.
I originally wanted to do IB but got a GCM offer and decided to take it, ended up placing DCM. Originally I wanted to move to coverage banking asap (between summer and full-time, after year 1, after year 2, etc.) but my mind totally changed after having all of these conversations and experiencing the work for myself and re-assessing my long-term goals.
For analyst and associate all-in comp is very similar. Base is exactly the same and bonuses are very similar (like I said, at my bank it's basically the same but at others there might be a slight decline in bonus size).
Anecdotally the two analysts I'm the closest with got a $55k bonus ($140k all-in) as an a1 mid bucket and the other got a fat $85k bonus ($170k all-in) as a top-bucket analyst 2.
You should also think about hourly comp in this situation. Even if M&A bankers are pulling in $10k more, how much more did they work? (however, remember that they have the ability to exit and you don't)
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Gotta say, this was super helpful. Im in the same boat as you (really wanted LevFin, ended up in DCM) will be joining full time at a BB this summer (did not summer in DCM). Question I have for you: Im afraid that I will really miss some of the aspects of pure corporate finance that I legitimately enjoy (growth drivers & opportunities, analyzing key risks, customer base, management, and even modeling to an extent), but how much exposure to these aspects do you get on a day to day in DCM, or is your job purely based on market fundamentals for your sector and the nature of the security the company is trying to issue?
I ask because everything about the lifestyle in DCM is super attractive for obvious reasons (and even more so after reading the threads "Is Apollo that bad" and "UMM/MF Hours") and I'm not sure if the trade off for the M&A -> PE grind is really even worth it, especially if I can find a niche where I can still have the exposure to corporate finance, good comp, and good hours.
I didn't really get any exposure to those things. You may need to understand why a company needs the debt procedes you're issuing but you never go deep into it. You're mostly focused on the product, the market, getting the product to market, marketing the product to investors. That's been a downside to me as well: no real exposure to companies.
To be honest tho I feel like those themes you mentioned (growth drivers & opportunities, analyzing key risks, customer base, management) are very overplayed when describing coverage banking. Yes you get exposure to them, but most of that exposure is crunching numbers in a model or formatting the ppt slide where that info goes on. Obviously those are IB stereotypes but they're mostly true; analysts aren't thinking about any of those things in depth.
Where you will get big exposure to those things is PE, which is only really possible from an IB route.
But as far as your points about lifestyle, I totally agree. The rat race never really ends and (getting philosopohical here) I don't really think it's for me. I've thought a lot about what's fulfilling to me and I don't think I can achieve my (key word, "my") optimal work/life balance in the IB->PE route. Others may do what they please but I don't think that path could ever be fulfilling for me: it's hard to distill any true motivators from that path besides money and prestige. I would be a lot happier in DCM working less and still making a couple to several hundred grand throughout my career. But that's just me. If I went the PE route it would be for the wrong reasons, so I decided I'd be much better off sticking in DCM. I think others who do this have similar reasoning.
Also, purely out of curiosity, where did you summer?
Really interesting read, thanks for posting.
I recently posted a question on here about moving into DCM from a ratings agency (specifically emerging/frontier sovereign coverage) - would you mind chiming in if you have anything to add?
We have two analysts that came from ratings agencies on my Structured DCM team
Is there a way you can PM me as I have not got enough monkeys to do it myself but will love to gain further insight from you regarding this space!
how much of a bonus haircut are we talking about vs sr peers in IB?
Can someone clarify if there are big pay discrepancies across dcm groups? I’ve seen corporate DCM, CMBS DCM, Munis DCM, ABS dcm, would all give “similar” skill sets? obviously the products are different, but a bond is a bond is a bond, with some nuance of course, but at the junior level would it be realistic to go from one of those non corporate DCM roles into a corporate DCM role? Also do the non-corporate DCM roles pay a lot less?
What is a "non-corporate" DCM role?
Debt issued by not-corporations. Often structured finance such as mortgages / credit cards / autos / student loans / esoterics, but can also include SSA (sovereigns), project finance, etc. Comp at my bank is in line (and often higher) than Corp DCM
..
Do any of you kids actually know how boring DCM is?
Like yes, it's still IBD (so you can still tell chix you "work in banking"), yes comp is only a slight discount to M&A groups, yes hours are more manageable etc etc - that is all true but I think you're underestimating how boring the work in this group is. Until you actually interact with clients, DCM is literally the epitome of a "market update" group. One of my closest friends worked in DCM (she moved over to a coverage group after 2 years btw) and literally the company you are dealing with doesn't even matter - it's just (1) what is your company rated (2) what is the corresponding price that Bloomberg spits out relative to the Treasury curve and that's it
You need to take into account the possibility that you will get bored of DCM. In which case you are screwed because the only tangible exit opp you have is (1) moving to a Treasurer role at a large IG corporate (extremely few positions, and usually filled up by company lifers than external hires) or (2) business school. Before you enter this group, make sure you know what you're getting yourself into - every single one of my peers who started out in my analyst class in ECM/DCM had either moved to a coverage M&A group or left to do something else completely different after 2 years
Second literally all of this. I got placed in DCM against my choice for my summer. The work was so monotonous, filled with market updates and pricing comps that are literally just estimations based on market. I am really hoping to move groups ASAP (goal is in a year, but i would love to hear if anyone thinks this is possible) from DCM to a coverage group. The hours and comp might be great but if you're bored out of your mind whats the point.
I am in a similar boat. However, having a lot of trouble in finding an industry group that I would actually enjoy out of DCM. How do you bridge that gap? Or are you taking the first coverage position that becomes available?
Damn, was afraid of this.. do you know anyone who's successfully managed to lateral after 1 year or do you almost always have to do a full 2 yr analyst program first?
Yeah vanilla corporate dcm is boring sure, but structuring ABS esoteric deals, pricing complex CMBS structures, structuring complex muni debt, structuring EM corporate issue is anything but mundane or vanilla. Just adding context, in my opinion those DCM seats are much more quantitative and technical than the corporate vanilla AA+ comps on a typical corporate deal youre talking about.
Those more complicated stuff is done by a separate group (usually named like securitized products origination or something along those lines), which is under the general DCM umbrella but not by the literal "Debt Capital Markets" group itself. The standalone DCM group does exactly what you described in the latter - corporate vanilla AA+ stuff. Completely mind numbing shit
Any insight on ECM? I’ve heard it can be a little more intriguing, especially working with convertibles and equity-linked derivatives
Many banks have ECM and Equity-Linked (incl SPACs etc) as separate team
this is true of SOME but not ALL dcm roles. I literally never do any of these vanilla updates, but I don’t work on bond originations.
What kind of DCM group are you in? I’m interested in hearing about your experience
bump
Literally zero exit opps for DCM. They actually put you on a list that makes it essentially impossible to find a new job after your analyst years. Like honestly not even McDonald's will hire you after seeing that you worked in DCM. Good luck buddy.
What bro?
idk i thought it was funny
I was in DCM at a major bank and eventually moved to Coverage/M&A (ignore the title). Everything I say here is from first hand experience/observations, so some things such as comp or exits may differ substantially from others. In general, I would not recommend DCM as a strong career path.
I worked in a corporate/vaniIla IG Bonds group and it was really interesting at first. You get to see how the IG debt markets work and keep a close eye on what is going on in the markets and economically. You'll learn the entire process of how bonds get originated, priced, and executed. It is fast-paced, but you still got good hours (55-70 hours) and minimal weekend/on-call work while at the same time getting paid the exact same as other groups such as coverage and M&A. In terms of exits, people in general moved internally into a variety of roles such as investment banking, corporate banking, or even to sell-side credit research (and before you start saying why you would leave DCM for corporate banking, at least at my bank, the pay was quite solid for corporate banking and offered a more chill lifestyle). In terms of external exits, people generally left for investment banking at other firms in usually coverage/M&A.
The issue is that DCM is VERY niche. You become an expert in the bond raising process, but it is not very transferrable at all. As other people have echoed, your skillset isn't really that of a trader, but isn't that of a banker. You may get put into a industry coverage DCM group, but you'll find that you really don't need to have much industry knowledge at all to cover your clients. I never had to understand my clients in the same detail as I currently am doing so in coverage/M&A and I believe that the reason for that is that IG clients have registrations in place, have done these issuances many times, investors are deeply familiar with the names, and the credits are less risky . The vast majority of the time it is very vanilla financing and you are repeating the same bond process over and over again. It gets old very fast and within 3 months, my entire cohort already decided to leave and would leave within 2 years, but we also came in with the original goal of doing traditional investment banking (we did keep an open mind and decided it was not right for us)
In general, DCM is still a solid group to be in, its a good experience (albeit niche) and is a good platform to move internally/externally if you want. If you want to stay, it also offers a good lifestyle especially for the compensation, but keep in mind the competition is fierce as you'll have a bunch of people trying to go for associate spots but at the top it is pretty lean. I would say we probably had like 10-15 analysts, 5 associates, M&A and this happened you would have a much wider variety of places you can go.
If you're at a BB doing DCM and want to transfer to M&A or coverage, how likely is it? Seems like majority of DCM analysts want to do that, so what are the actual odds of one converting? Isn't it pretty competitive?
Our program was a 3 year program where you were expected to spend at least 2 years in DCM. As you near your third year, you can work with your staffer who has connections with other groups to discuss transferring groups. So in this case, it is important to have a good relationship with your staffer, your MDs, and the coverage/M&A group members/staffers. You'll want to start building this network fairly early, so don't wait till you are like 2.5 years in to start this. This is not a guarantee, but it is I would say fairly high percentage as long as you do it right.
However, you can also just network directly with coverage/M&A groups and transfer, we had people transfer after just 1 year without the help of the staffer. Obviously it is frowned upon in the DCM group, but they didn't intervene or complain with the coverage/M&A group.
I'll also say that it is not necessarily fair to say most DCM analysts just want M&A/coverage, often times they originally wanted it, but they may like DCM and stay. My cohort had people pretty dissatisfied with DCM, but the lateral cohort and new cohort had higher retention.
Thanks for that write up, super helpful. A couple follow ups: - Do you mind speaking to your lateral process to coverage/M&A? (When did you begin networking with your group of interest? Who did you formally bring up the idea of a lateral with and when? What were those lateral interviews like? Did you pick a group based on culture/interest or solely based on who had a seat open? Did you lateral after 1 year or 2 years and could someone lateral after 1 year if an analyst position opens up in another group?)
What was the learning curve like in DCM (you mentioned 3 months), would you say that you pretty much fully understood most aspects of the role that soon into starting your job?? Did you dedicate time while on the desk toward learning modeling and preparing for interviews?
As an incoming analyst with the intention on eventually moving onto the buy-side, should I completely forgo any hint of on-cycle recruiting and focus fully on lateraling first before I try and pursue head hunters or should I take a chance even while in DCM?
Would appreciate your insight
I did not lateral internally, I moved to another bank, however I can speak to the process from other people's experience. They generally started networking with the analysts/associates from the desired group and as they got closer with them, these guys referred the person to the staffer and they built up a connection over the course of a year. As a FYI, even if your group is fairly open to transferring, do not publicly broadcast your intent as you will piss off everyone around you as they will be thinking "this guy doesn't even want to work here". You don't need to be super secretive about it, but don't go around openly telling people. I would suggest starting several months in, maybe 6 months on the conservative side and 3 on the aggressive. I'd be careful starting too early as people may think that you don't even know what the job entails or have really any reps yet.
Learning Curve - To give a comparison, I felt that in 6 months I understood 75% of the job, but I'll say that in coverage/M&A, even after being here 2x as long as DCM, I feel like I understand only like 40% of the job and part of the reason is that M&A has many more variables and each deal is far more unique than a vanilla bond deal. You will almost certainly encounter something in each deal that you haven't seen before in M&A. Time on the desk was either spent working, reading up on news via BBG, or chatting with buddies either on BBG or on the internal firm chat. You can't really goof around or do unrelated stuff like modeling because you are in a trading floor setup so you have 0 privacy, sit right next to MDs, and people will always be able to see what you are doing.
Moving to Buy-side: Unless you are maybe aiming for IG Credit research roles (which is still a stretch as your skillset really involves no modeling or indepth credit analysis) I would not bother recruiting other than maybe registering your interest (Oxbridge,GoBuySide, HSP, OSP) so you can start getting positions sent to you. When I talked with recruiters, I got sent a whole bunch of roles, but pretty much the only realistic ones were BizDev/IR/fundraising roles for funds. Your best bet is to lateral to traditional IB (coverage/M&A) work a couple years and go buy-side recruiting from there, this is by far the easiest road to take, even if it takes an additional year or two to get there.
Hello can someone explain to me the relation of DCM/ECM to Investment Banking. i thought these were all under the product groups of BB. why are people talking of switching form DCM/ECM to Investment Banking. isn’t it already a group under Investment Banking. I’m sorry if this sounds stupid. I’ve been researching I really can’t get it.
Deleted
You're right. Dcm is investment banking.
Investment Banking generally entails 2 things, capital raising and advisory (like M&A/RX). The GCM group raises equity/debt in the primary markets for clients and is part of investment banking. However, people refer to "investment banking" often times more in reference to a more traditional group such as M&A (another product) or TMT (industry/coverage group).
How is financial advisory different in investment banking compared to consulting? Aren't you helping companies improve operations in both cases?
By definition ECM/DCM are IB product groups. Some banks – Barclays, CS, GS – have CM in the same group as IB, while others – MS, BofA – have it in a separate GCM group. At the end of the day CM are IB product groups, but most of the time the colloquial mention of “IB” is referring to coverage and M&A
Well GS has IBD Financing which is basically their CM. Coverage groups are in IBD Classic.
Can anyone share insights on Citi's Latam DCM team. I've heard it's pretty sweaty, but know for being the best on the street.
I'm also very interested
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