Loan workout group move?
Im an experienced analyst for a bank in its industrial leveraged loan desk, primarily responsible for cap markets activity as well as underwriting balance sheet holds. I like it a lot, but due to COVID, have been told im moving to the workout group that handles the distressed loan portfolio. Would this be good experience if I eventually wanted to jump to a more distressed debt/special sits fund? Think its a more defensive role as opposed to buying a bunch of stuff, but would get good experience with documentation, restructurings, and bankruptcy processes.
following
Bump
SAG?
What’s SAG?
I think it's special assets group
Definitely mate - lots of restructuring coming up I'd expect!
Would the function of this role just be working out/rx of the banks distressed loans from transactions where they actually provided capital? i.e, bilateral facilities, syndicates. Meaning there wouldn't be any origination/underwriting or "live" transaction work and you would just be working through the process with the clients, trying to protect the bank's capital. Correct me if im wrong, I'm just trying to get an idea of the switch you would be making.
It sounds pretty interesting, but sounds more similar to risk roles versus traditional cap mkts role. I do agree that it would be useful to get exposure to rx process and learn about protections in loan agreements and docs, especially if you want to end up distressed debt later on.
Appreciate the throughout response. Yes that’s exactly right, mainly processing amendments for distressed, previously underwritten loans. Should’ve mentioned it’s a sponsor group as well. There are some new money situations (DIP’s, maybe even acquisitions if performance improves) but it’s mainly monitoring and intense legal negotiating while working with other creditors and the sponsor. I’ve had a couple years of underwriting new deals but not a lot of distressed work so I am thinking it would round o it a nice skill set but curious to your thoughts
This is a great role. You’ll learn much more about debt in this role vs traditional lev fin / cap markets role.
Agreed. Excitedly accept this move
What would the exits from such a role on the buyside look like? Distressed funds?
What type of bank are you at? What size are the companies you cover?
Middle market, generalist but mostly tech and business services
So like a super regional? What is your compensation?
Hi - I’m considering a similar move. Happy to chat about it privately.
I'll give you my experience, which may or may not be indicative of yours.
I worked at a MM bank, starting in syndication (selling our agented paper), moved to cap markets (buying non-agented paper), workout and then business development before I left.
At my bank, workout was a risk function, the main goal was to make sure the regulators didn't crawl up our asses, the secondary goal was to be wildly impractical and whine to the sponsors that we wanted more money but never actually did anything.
Now, when I advise bank workout clients, I very often see the same behavior.
My advice to you is to get in, learn as much as humanly possible, then get out to a real distressed / RX role.
For any workout bankers (or the inevitable "my buddy is a workout banker and he personally saved the entire bank's balance sheet, he didn't) I'm not here to argue, just giving my personal experience.
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