LevFin and IBD
Hi, can a guru clarify a bit for me? Is leverage finance under the umbrella of IBD? I got a little confused. I was watching a training video on modeling, and the instructor said leverage finance is part of IBD. However, I was on the web searching for some job descriptions, and one job said "2+ plus years of Investment Banking experience, Leveraged Finance or Financial Sponsors experience is preferred." It sounds like IB and LevFin are different.
Yes LevFin is under IBD. Sometimes it might be grouped under DCM, but as far as I know most banks have a separate LevFin group under IBD.
Thanks a lot, James.
If you guys do a search of LevFin and FS you will see some good posts about what each one does and how the groups work when together and when separated.
At MS its under capital markets
Is there a specific reason certain banks place it under DCM and others in IBD?
LevFin is high-yield DCM vs investment-grade, so that's why it's under DCM/Capital Markets in some firms...
It should fit under the transaction aspect of the IBD...as opposed to Advisory. Other FIs aside from IBs have LevFin groups. Some large institutions even have it as part of their Commercial Banking group (for smaller transactions) and their DCM (for larger transactions).
Barcap has it under IBD.
Curious: Why is it that DCM and LevFin are sometimes lumped together, but when they are separate LevFin is considered much much more desirable than DCM?
Is it just the applicability of LevFin, high yield to PE, despite a similar skill set to DCM? Or is the work actually quite different?
levfin deals with NON-investment grade debt (loans/bonds), DCM is mostly investment grade. Reason why LevFin might be more "desirable" has to do with the fact most LBOs are financed with NON-investment grade debt. It potentially leads to better exit opps in the PE world.
to the OP, the reason the job post said FS or LF is because FS is a industry group while LF is a product group. LevFin will give you very strong exit opps.
After searching this forum, I found a lot of discussion about Lev Fin, and I understand that Lev Fin may mean different things for different banks -- some do modeling while others only do pricing. For MS, given that the Lev Fin group is under GCM, does it mean that the MS Lev Fin is an inferior Lev Fin team? How's its exit opps to PE?
bump
Leveraged Finance in I-Banking (Originally Posted: 09/13/2006)
What activities is leveraged finance comprised of in investment banks? Is it a front office role? Is it part of transactional advisory (M&A) or underwriting or something else?
What roles do leveraged finance analysts play? What do they do on a day to day basis? I'm speaking with someone from this area, so I'd appreciate the feedback. Thanks.
Yes Lev Fin is front office... it is a product group and it's focus is on raising capital for high yield (credit risky) companies and also for financial sponsors for leveraged buyouts.
On a day to day basis, an analyst would be drafting interoffice memoranda, creating roadshow/rating agencies presentations and running the models of transactions. It's very execution focused, meaning to say that pitchwork is something that this group would not do as much. In my opinion, it's a good group to be in.
Hope this helps.
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