Been here nearly 8 years, and finally back on the scene after a 2 year hiatus.
Excited to be back and thank you in advance for anyone that can help answer the questions below. I got some banana's to give out.
It would be great to get perspective on the following if you are an
1. If you are an arranger, investor or trader of syndicated loans,
2. asset manager, investor or trader of distressed debt, or
3. an asset manager, investor or trader of CLOs.
Questions
1. What is your title, role, and firm type?
2. What does your day to day look like?
3. What divisions do you interact with across your firm on a regular basis?
4. What would you describe as your top 3 pain points on the job?
5. What would you describe as the industries top 3 pain points?
6. What would you believe would help solve these pain points?
7. What technology do you use to help you with your job?
8. Is your firm evaluating any new technology solutions to enhance efficiency, client services, and risk management? If so, has enterprise blockchain services been considered from the majors: Symbiont, R3, Hyperledger, Axoni?
Hi there, I work in that field in China. The things I do might not be so fancy like you guys did in advanced market, but I would love to share my side of the story and learn about yours.
Brief intro on my job: I work for AM at a top bank in China. Securitization is categorized as asset management business by the Chinese regulator, because here in China, the legit SPV used for securitization is an asset management scheme. As a result, I became a securitization banker in a buy side department, weird...I do both sell side and buy side work in securitization. I arrange deals, mostly esoteric asset securitization, and also lead the research on structured products investment for asset managers. But recently we began to realize that we the asset management division does possess the same level of deal resource as IBD does, we can't expect to have securitization deals all the time. In the long run, we will make the transfer into a complete alternative investment group, and give up the banking business.
I spent half of my time working with analysts and interns on the paperwork, preparing prospectuses, drafting transaction documents, etc. I spend the other half doing models and statistical analysis on structured investment opportunities and pitching the ideas to money managers.
I do not interact with other divisions very often. Since both IBD and AM are doing securitization deals, we are in the competing relationship and we rarely cooperate. Sometimes we pitch investment opportunities to FICC and the two divisions would invest together.
First, lacking deal sources. But in the long run I guess we would just abandon the whole thing and focus on alternative investment. Second, the regulator forbids asset management divisions of investment banks to invest in anything that has a leverage ratio higher than 2:1, which is ridiculous since almost every structured product passed that threshold. As a result, we have to ask an outside PE firm to create a fund as the investment vehicle, and we make investment decisions for the fund as the fund's investment adviser. Third, we are still quite new to this business and there has not been much sufficient data in the Chinese market. Also, neither the research analysts nor the scholars in China have established a mature methodology to valuate the subordinate tranches of structured products. We are still learning from Wall Street and trying to create our own methodology.
Aside from what I listed above, the originators and investors in the Chinese market are highly unprofessional, which could be a pain in the ass for bankers sometimes. For example, I helped arrange a CLO deal for a commercial bank a few weeks back, My client is a top 5 commercial bank in the country, yet they couldn't even find a staff capable of calculating the IRR of the underlying assets. The incompetence of our clients is really a big headache for every banker in the market.
I guess we just have to open our market wider to the western banks to accelerate the maturity process.
I use R and VBA a lot on my job. I heard that Python is more commonly used by structurers and analysts, but I'm more adept with R. R is more flexible and user friendly when dealing with excel sheets.
I'm working on a project to create an automatic system to make all the materials without human power. Ideally we just input the structure of the deal and the asset data, it should be able to produce the model and do the paperwork for us. But that's a long shot, I'm not even close to success.
Thank you, HoggieT! I gave you a silver banana.
Thank you! Would like to hear your story as well :)
Credit Research Analyst at a major asset manager in a Broadly Syndicated Loan group that invests institutional and retail money across a platform of private, public and CLO funds.
Day-to-day varies pretty greatly and really depends on deal flow in my industry coverage group. At busy times when I'm looking at a few different investment opportunities I'll be doing anything from DCF and Probability of Default models, to diligence calls with the bankers or management teams of the companies or reading through historic SEC filings and Lender Presentations. When deal flow isn't strong I'll be catching up an ancillary research for names we're already in, updating existing models, doing general industry research and coming up with potential secondary buy opportunities for names we're not already in.
We are walled off due to our broad MNPI access. We don't communicate with any other groups within the firm.
4, 5 & 6. Combining these because I don't think my pain points are unique to my firm/group. 1) non-standardization in lender presentations when it comes to both reporting format and timing of postings. Lately we've been seeing deals get more and more aggressive and bankers seem to be posting docs later and later into the process; many-times we're only getting partial information and have to follow up with deep diligence lists. 2) Spreads are tightening so much that we're having difficulty choosing investments for some of our CLO funds as the spread between cost basis of AAA tranches and the coupons on debt are thinner and thinner. We've recently turned down a few good deals because we'd simply just lose money on the low-coupon. Finding ways to lower cost-basis is a major issue in the current environment. 3) More of middle office pain point is that the industry is lacking technological standardization. Every firm uses different programs and does custom build outs for their needs but I assume the general needs across the industry are similar... some standardization in books & records/compliance/portfolio attribution would be huge for the industry, as well as if there was eventually a centralized electronic trading platform that could help to speed up settlement times from the current T+15-20.
We use a few different platforms for different functions... Wall Street Office, Aladdin, Black Mountain Everest, and Bloomberg.
Not currently, no. We're in the final stages of building out Everest for different middle office functions - a project that has been underway for 2 years.
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