Ask an investment banker anything...

[Temperature]

Would respond in detail as possible (would be great if I can get out of red - got mod neg rep'd for liking Rebecca Black - Friday video but I only like the raping bit).

I work in Leveraged Finance - I raise high yield bonds, leveraged loans for companies and financial sponsors looking to buy-out companies. Closed many big transactions. Got 3 years of work experience and will be promoted to Associate. Used to work in M&A but moved 1.5 yrs ago.

[ChristianBBer]

Explain the process when a commercial company wants to issue bonds ?
Who buys them ? How do they resell them ?

[Large_Emu]

Why did you and your fellow banker friends fuk up your country's economy?

[Whundrbread]

i thought it was standard to be working for 2 years before being promoted to associate.

U banking in 6 figures straight out of college?

Work hours/work week?

[Temperature]

Explain the process when a commercial company wants to issue bonds ?
Who buys them ? How do they resell them ?

I work for high-yield bonds, basically when a company is highly leveraged (has too much debt on its balance sheet). A good example is Dunkin Donuts and Toys R Rus which are owned by private equity firms.

If a company wants to issue bonds, its likely they want to refinance their existing capital structure. In this climate we are seeing allot senior secure debt being refinanced.

Company elects one bank which will be a lead-left bookrunner (which will do all the bonds).

Before issuing bonds, you need to get ratings (from S&P and Moodys). This will be first-time issuer ratings, process takes around 6 weeks. You have to do a rating presentation which is tough work.

You have a kick-off meeting where you bring the banks, lawyers and the company in to discuss the bond issuance. You discuss pricing, legal documentation (Offering Memorandum), etc.

Lawyers work on the Offering Memorandum while bankers work on roadshow and rating presentations. Bankers also give input on the prospectus which is basically the marketing document that is sent to investors.

THe investors who invest in HY bonds are typically long-only institutional investors, CLO funds and hedge funds. Banks have close relationships with top tier institutional investors.

Next process once u have sent prospectus to investors is to build the book. The company goes on a roadshow presentation, pitches to investors and then the sales team gets pricing info from investors (what yield/price they would look to buy). Syndicate team builds the book and then we price the bond! and its now in the market where you can trade them (secondary trading)

The bonds are there until maturity, e.g. 7 years. Ussually they have a Non-call period where the company can't recall the bonds. Companies refinance their bonds when its coming more closer to the maturity date.

[BBmiscer11]

lol..

[Temperature]

i thought it was standard to be working for 2 years before being promoted to associate.

U banking in 6 figures straight out of college?

Work hours/work week?

Thats ussually the case but for some people you can work 1 year extra and get promoted to Associate. Not everyone goes to B-school to do an MBA. There are some people who just stick it out and do an extra year and then get promoted to an associate.

I work 15-18 hours a day, sometimes allnighters and allot of weekends.

[gouscfootball]

I want to get into investment accounting/PE later on in my career. Where do these firms typically recruit from? Is this industry all about connection and how tough is it to get in? Can I network my way if I try hard enough?

What are your hours like? What is the typical rate on a 7 yr bond that a highly leveraged company like that issues? What happens if they dont pay up? Is there insurance on those types of bonds?

[drew_c9]

Im starting an internship for a private equity/venture capital firm this summer. Any advice for a someone starting out in the industry?

[Temperature]

Why did you and your fellow banker friends fuk up your country's economy?

Government and people who are living beyond their means are also to blame for the subprime crisis.

[Enlightenment]

How much did you make from the whole Japan earthquake fiasco?

I made 5 figures and i only have two years experience of investing

[dave32]

How much of your business was private placement vs public offerings?

[Drukqs]

How's your company's CRE group doing? Actively lending, treading water, or closed shop? I was a CMBS/CDO analyst at a French investment bank before everything blew up. I miss it.

[Temperature]

I want to get into investment accounting/PE later on in my career. Where do these firms typically recruit from? Is this industry all about connection and how tough is it to get in? Can I network my way if I try hard enough?

What are your hours like? What is the typical rate on a 7 yr bond that a highly leveraged company like that issues? What happens if they dont pay up? Is there insurance on those types of bonds?

Ivy league schools. If you want to get into the big boys club (Goldmans, JPM, Merrills Lynch, Morgan Stanley) you need to go to the top schools. Banks have milkrounds here and they actively recruit the best from the best schools in the world. You need to have a good GPA and also do allot of extra cirrucular activities (e.g. finance society, investment society, football club) to demonstrate you are all-rounded. Also alumnis who are from top B schools are deeply involved in recruiting from their own schools. So knowing someone who works in a bank can help to get your CV to the HR department


My hours are long as I said above. I work almost all weekends, specially now when the capital markets are hot.

Typical rate on a 7-yr bond really depends on the rating and the credit, industry, etc. A B single name can be in the 8-9s and BB can be in the 7s.

If the issuer can't pay its interest on the bonds, then the company will be default and the inter-credit agreement will be induced and the company will have to undergo a series of events which may involve liquidation/chapter 11 bankruptcy to pay off bondholders.

[Temperature]

How much of your business was private placement vs public offerings?

95% public offering. Capital markets are hot right now so there allot of public demand for high yielding instruments. Private placement occurs mostly in the mid-small cap markets. My focus is on the big market and I deal with big companies and financial sponsors.

[Mafioso76]

u lift bro? considering u work so many hours

[Temperature]

How's your company's CRE group doing? Actively lending, treading water, or closed shop? I was a CMBS/CDO analyst at a French investment bank before everything blew up. I miss it.

We are very "selective" in the type of transactions we participate in, in terms of underwriting and holding it on our books. We aim to syndicate 100% of the debt unless we look at RCFs which are ancillary to the debt we are packaging. French banks like Credit Agricole and SocGen are definitely more aggressive than us. Also watch out for the Japanese banks although the Earthquake will hinder their ability to underwrite big cheques.

[Temperature]

u lift bro? considering u work so many hours

Yes, I do find time to lift although right now I am trying to lose weight (I had before joining banking).

[bbacn123]

Do you hate the fact that you work so much? I could never do it for money alone. Only way I'd work that much is if I was involved in some sort of research I considered important.

[Mafioso76]

i got 10k....where would u recommend i invest it? give me middle and high end risk if u can

[Temperature]

Im starting an internship for a private equity/venture capital firm this summer. Any advice for a someone starting out in the industry?

Definitely leverage your experience in PE to get a top job out there. Not sure what PE/VC firm, but those principals will definitely have connections to some leading players.

Key is to NETWORK. Meet as many people as you can from the industry. Find out if there are any conferences going on, attend them, give people your cards. Always show you are motivated and enthusiastic about the industry.

Make sure your financial modelling is in good shape. Allot of books/websites out there that can help you. PE/VC is all about due diligence work, financial modelling and going through business plans and memos. Work hard, keep your head down and you will be rewarded.

Remember, PE/VC/Banking is a people's business. Make friends with people, be sociable. When you are working long hours with people in PE, its important they like you as a person. So be humble, make sure your communication is great, CC people in all emails, etc.

Also make sure you check 100% of your work. Get a good reccomendation from your superiors and use that to get into something better.

[drew_c9]

thanks man solid advice! reps.
Can you recommend any books or websites for the modeling aspect?

[craigcmead]

why is my back so itchy?

[Temperature]

i got 10k....where would u recommend i invest it? give me middle and high end risk if u can

I think US equities are looking good compared to emerging markets and Europe. I would like to see a split between equities and bonds make constructing a portfolio. You also need to look into your risk-return profile and the duration of the investment. If its for like 5 years, I would be weighted towards equity vs. bonds. Look for strong non-cyclical names out there, forget penny/cent shares - waste of ****ing time. I would also consider having a small holding in gold to ensure some diversification to counteract inflation risk. To be honest 10k isn't that much to invest, maybe you can invest in 3-4 names (2-3 S&P equities and 1 bond). Banks aint giving good deposit yield anyway so fuk that. You will need to do some analysis on some names in US - Im a bond guy (high yield) so can't think of any names at the moment.

[ebn2002]

When is the fed gonna start raising interest rates?

[Temperature]

thanks man solid advice! reps.
Can you recommend any books or websites for the modeling aspect?

Check out books by Damodaran. Check his websites, allot of free excels (modelling, etc.)

http://pages.stern.nyu.edu/~adamodar/

[Temperature]

When is the fed gonna start raising interest rates?

Japanese Earthquake and volatility of oil price has definitely delayed banks plans to raise interest rate. I would be looking into Q1 2012. Bloomberg consensus used to be tail end of this year before all the **** went down with Libya/Japan going into recession fears.

[RandomWalk]

Why are you posting on misc when you should be making some pitchbooks?

[drew_c9]

Check out books by Damodaran. Check his websites, allot of free excels (modelling, etc.)

http://pages.stern.nyu.edu/~adamodar/

reps for life. Where do you want to be in 5 years? What are the advantages of working PE/VC?

[Temperature]

Why are you posting on misc when you should be making some pitchbooks?

I am waiting for comments from my managing director on a memo.