Debt is boring
Change my mind or throw MS idc. 1st year analyst working in levfin and the transaction work we do is just so unstimulating to me especially since there is little modeling. I've always thought equity investments, M&A, and stocks were more interesting than working with bonds and spreading debt comps and I feel like I get to actually understand the companies and industries with valuation which I don't get to do in levfin. Am I basic for thinking equity is more interesting or am I missing something with debt?
Well, it just depends on which bank you're in. At JPM London, you do a shitload of LBO modeling. In some other banks, the sponsor group does it...
Why do you think debt has such bad exit ops compared to M&A. Less Learning -> Less Exit Ops - > Less Ambitious People -> Even Less learning ->...
My group does 70% sellside and 30% debt raises. Honestly, I like debt raises. Sure it's not as "sexy" as equity markets, but there's less work involved dealing with debt investors comparing to equity investors. Debt investors care much less about growth, they just want their money back. Selling growth is where all the work comes in. Additionally, if you understand how debt works, you'll give yourself a good shot at getting into a PE shop, since they constantly deal with debt. I'll take working with debt any day.
Yeah when the staffer calls me for a debt deal its almost a sigh of relief because it will all be easier work.
Maybe you are only thinking about from a syndication perspective where you don't do as much modeling, but I find debt more interesting than (public) equity because the markets for debt are more opaque (less WSB influence), more creativity on structure, and every thing tends to be asynchronous due to credit agreements (e.g. multiple tranches of term loans with different credit agreements may have different covenants and risk profiles.)
Debt is way more interesting to me because I enjoy the downside analysis - the work is much more rooted and logical and I’m analyzing the entire company while looking to get a grasp of the key risks of lending money to it and the mitigants that would warrant lending money to that company anyways.
Finding the balance in leverage is also interesting, seeing what’s the maximum a company can lever up to speed up growth without tipping over the edge of a cliff, especially in highly cyclical industries - it’s fun and interesting.
fwiw; I would take LevFin over ECM 10 times out of 10.
Agree, take levfin over ecm any day
+1. That overall analysis to find the potential downside and having the mindset of "how fucked does this company have to get for them not to be able to pay anything and how do i protect myself" has always been more interesting than trying to pitch unreasonable growth and made up synergies in some of these SPAC and M&A deals. I suppose it really all depends on the person.
I work in sponsors now after doing m&a and much more enjoy partnering with levfin and taking views on the cap stack all day. Levfin really just provides pricing and we do all the lbo modeling (otherwise id probably not enjoy debt either).
There’s lots of bullshit in the equity story im happy not to be working with anymore tho, now I’m purely looking at debt paydown and sensitivities while coverage / m&a deals with selling the story, etc. Debt is more grounded and enjoyable in that sense for me, plus it comes in a lot of different forms (equity is only ever residual) which can be refreshing even if 70% of what i see is 1L / 2L.
Really varies place to place for which team holds the pen on modeling and execution. My MM LevFin team does it all
LevFin is way cooler than ECM. Debt is more technical than equity. Bond traders are the smart money (or so it has been said). Just make sure you get yourself involved in LBOs and highly leveraged acquisition financing. That is always interesting.
We don't do LBOs because our sponsors group does them
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