Converts Desk and Future?
What’s up monkeys. I am a current associate in cash ECM at a mid-tier bank and I recently got a job offer (Associate level) for the equity-linked desk in ECM (I.e. the converts desk) at a top BB in the space (GS/JPM/MS). Was a pretty technical interview but I’m stoked. Apparently the market is red hot right now in the space.
The job itself seems pretty interesting. Need good knowledge of the high yield market, options, accounting, tax, etc. Seems like a Jack of all trades master of none desk, but I could be wrong.
My questions are the following, and related to an extent:
1) Exit Ops
2) Skillset
I know most jobs in ECM - like my current/former job in cash for example - are pretty mundane and offer great work/life for the pay but slim to no exit ops. I know the converts desk is highly technical, but in different ways than coverage. I understand “PE” is not an exit op for this desk, but what about other spots like at a special sits fund that invests up and down the cap stack? Or investors that buy the converts? Any other exit ops not in consideration?
Regarding skillset, would you say you are building a “valuable” skillset on this desk?
1. First off the exit ops are still pretty good. You can for sure get involved in more niche features in PE so investors that buy the converts could be an option. Even more broadly, you can find VP or department head roles at a lot of smaller companies with your experience. But they may not be necessarily as high-paying, even despite having a bigger role later on.
2. Financial modeling. Financial modeling. Financial modeling. You want to get a solid handle on that but anything in the options is really good. Since accounting and tax is important but more common knowledge, you'd have a big advantage if you can master options pricing.
How have you liked cash Ecm? Are your hours that much better than coverage at the associate level?
Hey curious if you ended up taking it and if so how you’ve been liking it. Just joined a desk at a mid tier that covers cash ecm and converts (which I didn’t really realize) and doing a lot with converts right off the bat. Super interesting, never thought I’d enjoy it but learning a lot and can tell I’ll come out much more technical from doing the work / getting the exposure
Hey congrats on the offer! I have an interview coming up with an Equity Linked desk in ECM and would greatly appreciate if you could give some insight into the questions you were asked when you were interviewing. Thank you in advance.
Are there any solid ECM desks outside of nyc?
Saw this thread so thought I’d share some insights as I work on one of the convert desks on the street. 90+% of the volume is done by the top four banks in the space (GS, JPM, MS, BoA). So if joining converts, would look to those four banks.
Yes, convert groups are one of the most technical product groups in each bank. You work with all groups of the bank (one of the few that can say that). Although it sits in ECM, converts are really a debt product at heart and I can speak to the interest rate and credit markets much better than the equity markets.
The skill set is very niche, but also quite technical as when you price a convert you price both a bond and an option essentially. You also work with corporate derivatives as well (call spreads, forwards, ASRs, etc) and almost no coverage banker understands how those work so you will always be needed. You also get to use Bloomberg while everyone else is stuck in factset. The job itself involves a lot of pricing convert bonds and call spreads, putting overview decks together, running comparative cost of capital and EPS analyses, and running standard capital markets execution processes. There is a decent amount of excel work involved but it’s not financial modeling, it’s more cash flow and cost of capital/EPS/accounting/delta hedging focused. But much more analytical than traditional ECM.
Exit ops can be very mixed. I’ve seen people leave to all coverage groups pretty easily, some Lev Fin, some go to convert hedge funds, some go to convert advisory shops, some go the Corp route. I’ve even seen someone go into deriv trading. I haven’t seen PE specifically but don’t imagine that would really apply tbh as it’s just a different skill set
I imagine private credit would be attainable since the skill set is pretty transferable but haven’t actually seen that tried, so don’t know. However, Ken Griffin got his start and rise to fame trading converts so no one will ultimately look down on your for being in converts.
Overall, I would say it’s a niche product that isn’t bad to spend 1-2 years in, but it can silo you if you stay too long. You get exposure to all groups of the bank, but pricing converts every day can get boring pretty quickly tbh.
Used to work in converts at GS / MS / JPM...above is spot-on. That and when you realize the entire street prices stuff on ancient software (Kynex lmao..)
Product has and will continue to confuse the hell out of coverage bankers and client CFOs
Will be a summer intern in this group and haven’t found much info online. What resources would u recommend to learn about this? Can pm if easier
Thanks for all this info. Starting as an A1 in Converts and EQL later this year at a lower-tier bank (think HSBC, RBC, UBS). Really enjoyed my internship there last summer as it was the only thing in ECM that challenged me. Ultimately, I want to make the move to HF or convert advisory as quickly as possible. Do you know what the comp is like on the convert advisory side? Would you recommend lateraling to one of the top banks after a year, or is this a waste of time? What are some of the names of the top convertible arb shops? & interested to know what's your plan after the converts desk and if you enjoy your work
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