High yield bonds vs syndicated loans

I have a FT analyst offer for BAML in lev fin and I have to make a decision between high yield bonds and syndicated loans. I know BAML is top on the street in lev fin, but which of these two areas is their strongest are (bonds/loans) and which gives the best exit ops especially for PE.

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Comments (10)

Jan 7, 2011

Loan

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Jan 7, 2011

B of A dominates the loan market, don't have much insight on the bond side.
Loans are a key part of any LBO (not that bonds aren't)
The documentation for a loan is a little more complex than a bond in my experience, I assume that the lawyers handle that on the bank side but exposure to that seems like a plus.

Jan 7, 2011

Can anyone add some color on what the its like working on a high yield desk within lev fin? I hear its very similar to DCM. Any thoughts on hours/lifestyle would be appreciated.

Jan 7, 2011
blake:

Can anyone add some color on what the its like working on a high yield desk within lev fin? I hear its very similar to DCM. Any thoughts on hours/lifestyle would be appreciated.

High Yield desk is DCM. Lev fin - HY is origination/execution.

Jan 7, 2011

Another thought:
I don't know how BAML arranges lev fin, but I'd try to find out who does mezzanine, PIK, etc. Exposure to more complex debt instruments would be a big plus IMO and I would seek out the group that does that (If they're even within lev fin.).

Jan 7, 2011

hopeful banker - do you have an offer for the lev fin capital markets desk (i.e., syndication desk...similar to a DCM desk) or is it BofA's lev fin origination group (more of what you would think of as a traditional investment banking role)? It almost sounds to me as if you have an offer for a cap markets desk because I'd be surprised if the origination group would make you choose between bank/bond (although BofA might be structured differently than what I'm familiar with).

BofA is stronger in loans than in bonds. All you need is a balance sheet to raise loans and they have one of the biggest.

If it's a desk and not origination, I don't think the PE exit ops would be that great because I don't think you'd be modeling financing transactions (LBOs, refis, recaps, etc.) like you would in origination.

Jan 8, 2011

^ precisely correct.

Most of the loan operations are run out of the Charlotte office, and the HY bond deals are executed out of new york. They are gradually transferring everyone to NY though.

Caveat though - be aware that LevFin at BAML is NOT a very good technical learning group. The majority of the modeling is done by industry/sponsors/M&A group.

No one has been placed into a megafund for years - placing into a good MM-PE firm is easy enough (although those MM PE firms do not necessarily pay better than BAML pays its associates)

Jan 13, 2011

BAML was number two in underwriting league tables for 2010-- powerhouse in both bonds and loans. Also just a heads up: it's called the syndicate desk. I said syndication desk once and was corrected by a guy who works on that desk

Jan 14, 2011

BAML LevFin is, generally speaking, split by industry rather than product.

Jan 14, 2011