I realised some banks separate their origination and syndication departments. What do the people at origination do? I guess drafting credit proposals and term sheets is their main task but are there some interesting additional things they do?
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I work in debt origination. It depends on the bank what you exactly do. Some banks öay split origination and execution functions. Make sure to dd this point in talks.
Some origination roles may also involve portfolio management, especially at private debt funds. Banks will likely split this function as they like their fee making guys to focus on their core role. Portfolio management is really a taste question. I personally like dealing with complex downside situations but would not want to involve in day to day administration, for example.
The Origination/execution role involves a lots of things. Starts with getting in a ask from client, pricing it, talking to the syndications desk, determine strategy if it is only a net take position or an underwriting position could be contemplated, whether you like to pitch other products in the context of contemplated transaction, brief your front office management on your thoughts regarding the opportunity (also when you want to kill it to explain why you walk away from a fee making opportunity. If you are at a leading bank you may be in a structuring/bookrunner position. In that case origination structures the debt package while syndication desk feeds what may be sensitive points for them to be able to push the paper.
Then once you have a structure in mind, you negotiate term sheet. Engage advisers. Review their reports, writer credit memo. Discuss with credit etc.
This whole process involves continous coordination and negotiation of bits internally and externally.
Once approval received, negotiate docs (Which me as you have to have the appetite to read legal documents and make sure your commercial points are reflected properly) Sometimes credit process and docs process may run simultaneous as clients will like to close the deal asap in most cases.
Hope this helps
Many thanks! Really appreciate the long read. I was wondering if you could elaborate a bit on the structuring part, in the end what exactly does it mean to structure? Specially in vanilla loans (e.g. bridge financing, term loan) does it simply mean to syndicate? Or does it mean for example to build up a structure that includes a SPV for the transaction? If that is the case what do you think is the role of an originator there?
- Structuring a transtion - client somes to you with the question, how best to finance their company/asset/project. - You pitch them how you think they shold finance it. A package of structured TL plus EBL for example. Or corp stlye TL plus capex facility plus RCF. --- all these structures would depend on what sort of asset or business you are providing finance for.
If you are not in a market leading corp bank; you will usually be the buyer of the structure. You will join bank clubs acting as arrangers (in this case the debt is either structured by the advisers of the borrower or one of the key banks would act as the structuring bank). Othe option for non major banks is buying into underwritten debt, few banks are able to do sole underwrites in the lending market (see league tables, will be the top ones).
- Bridge financing - in the context of equity bridges in greenfield or other sort? - These is usually a product you offer to your clients in order for them to lock-in increased returns form whatever project they are undertaking. If you lend to this sort of facility, usually you are undertaking coporate credit risk. The facility will be subordinated to seinor TL in cash waterfall and typically will not benefit from recourse to the assets/business. The recourse will be to the company borroweing the EBL or a letter of credit they may choose to post.
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If you are looking at a specific role, you sould tell what sort of lending it is that you are inteviewing for. I am answering from an asset based structured finance perspective. I am not as knowledgable in Coporate lending, but always got the impresion that it is much more plain vanilla than what I describe above.
This is exactly what I was wondering, thanks for putting this into a cohesive text! Now I think it's my job to figure out which product is best for which situation but I dont think they will ask that in an interview .. I hope
Thanks again!
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