Loan Capital Markets vs HY DCM?

MusicCityBoer's picture
Rank: Gorilla | 611

Recently received an offer with the option to rotate between a number of capital markets groups, and one is Loan Capital Markets--now, from what I understand, loans are direct balance sheet lending rather than market lending like in DCM, and incorporate the higher risk of HY DCM products, but I'm not sure how this changes the nature of the work done on an LCM desk. Any thoughts?

Comments (8)

Best Response
Dec 21, 2017

sounds like the loan capital markets in your firm does bank lending only - likes of senior secured rcf, corp loans. whereas typical levfin desk would cover these + institutional loans (e.g. 1st lien, 2nd lien) + high yield bond. as long as you are not doing investment grade or fig dcm, focus of work will be credit analysis, financial modelling (heavy focus on cash flows and assets and value), plus the typical stuff for a product group incl. documentation, internal + external process (i.e. internal credit committee, deal execution), ratings, marketing, etc. just make sure you get proper deal exposure to both loans and bonds. cheers

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Dec 21, 2017

So if I did a rotation predominantly between HY DCM and LCM, would that give me the type of product exposure similar to a more traditional levfin desk? And since I would be silo-ed into one longer-term, what would the exit ops from the two different groups look like? Thank you!

University of Chicago

Sep 17, 2019

How does FIG DCM differ specifically? Thanks.


Dec 23, 2017

Also, how would exits vary between HY DCM and LCM--I assume both could grant access to PE because they have a decent amount of capital structure modeling, but would HY DCM also open some opportunities in the distressed space?

University of Chicago

Dec 24, 2017

if I understand correctly how your bank is set up (similar to mine), both teams will be "market" teams with light modelling which restricts exits into PE (even more into distressed). As a product group, you will provide pricing and thoughts for bonds and loans to Lev Fin colleagues when they deal with sponsors (this will happen from both teams HY DCM and LCM, assuming you are doing leveraged loans and not plain IG boring syndicated loans). In DCM you should also have some true DCM coverage of sub-investment grade corporates, balance sheet driven. Both rotations will grant you some market and product knowledge which will allow intelligent conversations with PE funds during recruitment but your profile is weaker compared to your colleagues in LevFin,

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Jun 21, 2018

Would you say HY DCM comp is greater than LCM comp? Obviously depends on firm, but generally.

Sep 16, 2018

I would say yes but it is clearly bank dependent. Typically the HY DCM team is within IBD with all pros (and cons)

Sep 16, 2019
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