Leveraged loan investing?

I'm curious, how is the work at the junior level different in leveraged loan investing (buy side) vs levfin (sell side)? Are you still directly involved in the transaction process on the buyside? And finally, what would some exit opps be from doing lev loan investing at a relatively no name fund (<$50bn aum)? Would it be possible to lateral into a larger fund like Carlyle/Ares, or move to the private side aka direct lending?

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Comments (18)

Feb 6, 2021 - 6:28pm

Direct lending will tend to be a lot more DD heavy than pure leveraged loan investing, and the hours probably a lot more. I have a friend working at a fund on the liquid loans investing side who works 8-6/7 everyday, no weekends and clears >100k base + good bonus, while others in direct lending earn the same but work much longer hours with weekend work.

It's pretty common to see moves on the debt side from no-name funds or corporate and commercial banks into big funds.

  • Associate 3 in PE - LBOs
Feb 6, 2021 - 6:50pm

Used to do this for a hedge fund. Pretty great gig - paid $200k once you had experience and hours were pretty much 8-6 as stated above. Easiest move is to a CLO manager, other than that it depends on what the credits look like. I was working on mostly stressed names, which got me more interest than I would have had I been focused strictly on performing first liens. I got lots of interviews at direct lenders, but had more limited success trying to move upstream to more brand name shops

  • Associate 3 in PE - LBOs
Feb 7, 2021 - 10:12am

Haven't seen moves from structured credit happen. I'm sure it could, but the skillset is really fundamental credit analysis so the most common backgrounds are (in rough order) LevFin, RX, M&A, corporate banking / DCM

  • Intern in IB - Gen
Feb 7, 2021 - 10:01am

Do you find the work directly transferable to direct lending? And if you don't mind me asking what kinds of funds did you interview with, like the Golub/Owl Rocks of the world?

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  • Associate 3 in PE - LBOs
Feb 7, 2021 - 10:43am

Moderately transferable. You get more in the weeds with direct lending because you have more access to information and management (though still less than the equity side), and you need LBO modeling vs mostly three-statement and cash flow projections that you do on the syndicated loan side (covenant analysis is applicable to both). Overall the core skillset of credit analysis, risk mitigation, legal nuances, etc. is pretty similar across both and I think the rest can be picked up easily.

Definitely the Golub / Owl Rocks of the world, as well as several of the other big BDCs

Feb 6, 2021 - 7:52pm

This site does not talk enough about the great lifestyle afforded by choosing a career in leveraged loans. It's intellectually stimulating (in the right seat), but also pays a good amount when you factor for the hours required. I would not deter you from a job in leveraged loans. You'll learn a lot. Get paid well enough, and you can spin it into an M&A PE etc job if you really want to

  • Intern in IB - Gen
Feb 8, 2021 - 9:19am

Thanks everyone for your input. When assessing a LL investing opportunity, what should I be thinking about to determine whether it will actually be a solid seat? For starters I'll look at exits of previous analysts. But what are some other things to consider (# of names/analyst, etc)

Feb 9, 2021 - 1:56am

Buying loans is the exit.  If you land at a good shop that pays well, you just sit there and milk it...or quit to start your own shop.  

There's no reason to churn seats unless you hate it. 

Array

  • Intern in IB - Gen
Feb 9, 2021 - 7:45am

Totally, makes sense it's just I'm early in my career so I want to know I can leave my options open. Also I like to look at prior/post exits to get a sense of the talent pool, I want to work for smart people. Anything else I should be thinking about when assessing a fund?

  • Intern in IB - Gen
Feb 11, 2021 - 1:54pm
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