Do S&T desks include distressed debt groups that invest the banks own balance sheet? Think Citi has a group like this but do these usually sit within S&T or investment banking? Thanks.
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Yes. BB S&T will house what you’re referring to, typically as Distressed Trading desks, with a research driven angle when they take on risk.
Desks have varying risk tolerances/strategies. Most well known are DB, Citi, and Barclays. JPM BOFA CS MS and UBS operate under a slightly different mandate and GS has a mostly flow driven strategy. Then there’s Jefferies, RBC, and a handful of others.
what's the difference between a distressed debt S&T group at a bank vs a distressed fund (e.g. Oaktree). In terms of what they do I mean.
Could you also explain what you mean by a "flow driven" strategy? thank you.
In terms of “work” they do, no real difference, but you can imagine that the opportunity set for Oaktree ($130bn+ AUM) given its different funds, sleeves, etc. allows for larger check sizes and broader mandates. A BB S&T distressed desk will really almost never “buy a company” or write a huge check alone. Funds have greater flexibility in a) actually raising capital, and b) deploying it. Not to say that desks won’t partner up with them in esoteric situations... and the GS desk is run by a former HY trader. HY (more flow driven/liquid vs. distressed) + past performance of that desk leads it to be a more flow driven strategy (trading risk through, as a true market maker).
Here for the response
I think you're asking about principal investing, which is different than distressed debt trading on a S&T desk. Principal investing teams at most BB banks are generally more conservative in nature, still great opportunities, and still buyside, but getting that sort of molding in a chains-off sort of environment like a special sits credit fund is plainly different due to bank risk-constraints post GFC.
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