Liability Management

Can anyone explain to me what type of responsibilities an analyst would have in a Liability Management group within Debt Capital Markets? I also would like to learn about what exactly the liability management group does. Another question would be what are bonuses like compared to other DCM groups and how are the exit opportunities.

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Comments (6)

Jul 10, 2007 - 10:58pm

i cannot be 100% sure, but my guess is that this firm merged some of its commercial banking activities with the debt capital markets group of the investment bank.

liability management may be leaning more towards the commercial banking functions. if this is true, then the bonuses will most definitely not be as high as traditional DCM. for example, the fees on high yield debt can be as high as 3% of par. the fees on commercial bank loans and commercial paper are nowhere near that high.

you should not think of it as a dead end group though. there are niche fixed income hedge funds that trade bank loans (e.g., distressed debt funds). in case you didn't know, the bank loans of some corporations do trade. your experience in this area will be unique.

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Jul 10, 2007 - 11:23pm

I have a friend who interacts with a liability management group. They are responsible for managing debt buybacks for clients looking to reduce some oustanding debt issues. I believe there are other facets, but for the most part the only interaction he had with them was when they were attempting to buy bonds or loans back in the market. It's usually done very discretely so that market prices do not run up. It had nothing to do with commercial banking, but I cannot comment on the exit opportunities (I just don't know).

Jul 11, 2007 - 12:02am

thanks locke07 for your description. if this is the function, then liability management will most likely also be responsible for other interest bearing debt items on a company's balance sheet, hence liability management.

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Jul 21, 2007 - 11:08am

Locke07 you are right. I just recently accepted an offer to work as an analyst at BB in the Liability Management Group within DCM. We mostly do a lot of buybacks and pitch a lot. We also work with the industry bankers since we are the go to group for liability management advice.

Jul 21, 2007 - 12:41pm

In addition to the typical debt buyback/exchange analysis, the LM group I interact with does a lot of capital structure analysis. They answer questions about optimal amount of leverage and optimal stock buyback/dividend policy. Can't comment on the exit opps, but depending on which firm you go to I don't think it would be that bad. The LM group at my firm makes a lot of money and at the junior level the pay should be the same as the folks in DCM

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