Here's my background: Undergrad BS in biology non-target. Internship Summer of basic science research; MM healthcare coverage/M&A; pre-Master of Management boutique IB generalist; Masters of Management; boutique life science/biotech/pharma strategy consulting firm as a strategy analyst, now an associate in munis at a super regional commercial banks IB/capital markets arm. Open to almost any question.
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Could you please give me a broad overview of what your job entails and why you chose it? Thank you.
How did u break in from a non target? It's been an uphill battle for me with infrastucture sector experience and semi-target mba.
I did a masters at a target, did finance oriented work at the consultancy (M&A, DD, pricing) and networked hard. I can't emphasize how important that is. I still follow up with fellow alums, grab coffees, etc. I suggest reaching out to alums who don't get hit up constantly (JD/MBAs, civil servants). For me I hit it off with an alum, a job opened had an interview and a super day then got an offer as an associate.
At a high level I work with issuers and do everything from run models in DBC to work on proposals for refundings. I work with revenue bonds that are mostly HY. I chose it because I liked the capital markets and the housing/healthcare space. I had seen M&A and coverage I knew I preferred product.
What's your lifestyle like?
In terms of? Hours are 55-65, I'm usually in early by 7:45 and out by 7 or 8.
2nd Year Public Finance Analyst here. I get in around 9:30, out around 11:00 with 12+ hours every weekend. The comp is surprisingly high, on par with MM IB. No real complaints on the job but exit opportunities are obviously limited. People tend to stay at my shop longer or get out before the end of the first year. Working with bond trustees is a pain, but no real job complaints. MDs have a great work/life balance and comp can be very good if they're winning deals. It's an abnormal space in the industry. I'm still not entirely sure what I think about it.
There are some decent exits, the most common I've seen are to tax credit funds, low income developers, infrastructure funds, moving to more traditional DCM/structured finance. A lot of people will be lifers.
Do you cover taxable or non-taxable and a specific sector (i.e. Healthcare, Housing, etc.)? How do you feel about the fact that many think muni's are a toilet, and business will likely be more consolidated going forward towards the banks with the big balance sheets?
I cover tax exempt, straddling healthcare and housing so anything from hospitals to low income housing to CCRCs. I'd agree it's tough if you're doing GOs, but for industrial revenue bonds, the spreads are a lot better. Since I'm at a balance sheet shop I'm fine with that consolidation.
Why did you decide to go with munis over a more "standard" IB role? Is that something that you would be interested in moving into?
I always had an affinity for the space, I had a distant relative who was in it. I liked that the lifestyle was a lot better than M&A/coverage. I think I'll stay long term, the only places I'd move to are structured products/ lev fin/ HY or perhaps infrastructure. I love getting to know an esoteric market, I also enjoy the credit space a lot. Plus capital markets attracts certain types of personalities of which I'm one
Yeah, meant in terms of hours and general stress.
Thanks for doing this AMA btw- I'm headed to business school next year and am somewhat interested in this field, so it's nice to get some decent info.
Just to give a little more color I do think it is less stressful than M&A/coverage as issuers do tend to be more relaxed
These next few days are quiet so I'm back and able to answer some questions
How common is it to exit to an infra fund? Im assuming its still very difficult since infra funds mostly prefer those in project finance. With that said, is it possible to lateral from pub finance to project finance?
I haven't looked, but by virtue of doing more revenue bonds and often have project finance type structures it would presumably be less difficult. I know one guy left to RE dev and another to traditional AM focused on revenue bonds. Also where I'm at a lot of the credits are non-rated and hence you've got exposure to a unique area of the muni bond market.
Sounds like there are still many unique exit options.
How about in terms of salary can you share some numbers: forum has mentioned similar to IB but how much similar?
Varies from shop to shop but usually the haircut isn't that terrible but you may make 0-25% less than M&A or more traditional products and coverage
Also I mean in terms of all in
Salary is the same bonus can be substantially less (20-30% less) but your also working 20 hours less a week, this is for BB no clue what middle market is like
Thank you both, pub finance doesn't sound bad at all.
My goal is to end up at an infra frund: is the recruiting process the same for a non-target, cold emailing etc?
I was a lateral of sorts, I started as a management consultant at a boutique firm and then got brought in as an associate. I got my interview through reaching out to an alum, we chatted, they needed an associate and they hired me. So the traditional network your way in will still work. Get a copy of the SIFMA guide as munis are unique, the area I'm in ironically enough looks nothing like general obligation bonds (GOs). Learn about the metrics, bond and note types, technicals are very different. You may be asked about differentiating competitive and negotiated underwritings or what metrics you might use to look at a revenue bond.
Thanks a lot, lets hope I get lucky and speak to the right people. I've worked at a municipality in their engineering department, think I can use that to an advantage?
Lastly, what are some of the top shops?
Top depends on the space for GOs that space will be dominated by BBs so you'll see a lot of BAML, Wells, Citi, plenty of MMs like Cain Brothers, Piper Jaffray, RBC, BB&T and there are a ton of boutique banks like Cabrera, Loop, HJ Sims, Ziegler, Davenport, GK Baum, Lancaster Pollard. It all depends on what area interests you the most. I think GOs are deathly boring though.
They're not really in my space, but US bank isn't going to be competing with JP. Analysts will do RFPs, runs in DBC, meetings lots of meetings, they'll also do some models in excel to see coverage ratios for example. The day to day varies, you'll spend a fair amount of time in PowerPoint making presentations as well.
It also depends on the group, dbc makes things easier but understanding the concepts and how to structure help with very difficult transactions for example I am working on a deal which takes me 3 hours to size correctly everytime anything changes because of the complexities involved and took multiple days to build out the dbc and excel models for it. This will be for more enterprise issuers like transportation, utilities, healthcare and maybe higher ed. It just depends how complex the group and issuer is
There's nothing more fun than trying to create some of the models if you want let's say a sub piece, a taxable senior and a TE senior with project fund allocations by series and having to create a formula for 'bad costs' to allocate to the taxables. Some days Universal Bond Solution can be the bane of a pub fin bankers existence.
And also a lot of analysis and ability to answer the difficult questions in an top will come with experience and knowing the market and issuer which will come through time. And then when you think you know it you have to earn the trust of your senior bankers to be able to write out a draft for them which takes longer. Otherwise your stuck answering the stock questions on rfps and formatting
Is it common to see Municipal Advisors moving over to underwriting?
No it is not. The skill sets are entirely different. Muni underwriting is akin to trading, and most underwriters are actually traders. If you're on the advisory side you're more likely to get into banking than underwriting. I'm on a desk that does credits as a whole, including munis and I've never seen an advisor make the jump over.
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