Careers in Debt Markets

Alright, so your cousin is in investment banking, specifically leveraged finance. Here's what he's actually doing: He's advising companies and private equity firms on how to structure and raise debt for big transactions—like LBOs, acquisitions, that kind of thing.

No! That's the key difference. He's an advisor and an arranger. Let me give you an example. Say a private equity firm wants to buy a manufacturing company for $500 million. They come to your cousin's team and say, "Help us figure out the financing."

His team models out the whole capital structure. Maybe they recommend a $350 million term loan, a $50 million revolver, and $100 million in high-yield bonds. Then they actually go out and market that debt to lenders and investors—writing the pitch materials, talking to banks and funds, negotiating terms. They're putting together the whole financing package.

It is. He's probably working 70-80 hour weeks, especially when deals are closing. But he's also making $200k+ even as a first-year analyst. By the time he's a VP, he could be pulling in $500k to $1 million. The hours are brutal, but the pay reflects it.

Financial modeling—he's building complex LBO models in Excel all day. He needs to understand how to structure debt, what lenders care about, how to negotiate terms. And honestly? He needs to be able to function on very little sleep while producing perfect work.

Now you're talking about credit investors. These are folks at hedge funds, mutual funds, CLO managers, pension funds—they're the ones actually buying the loans and bonds that your cousin is selling.

Let's say your cousin markets that $350 million term loan we talked about. A credit investor gets the pitch book and has to decide: Do I want to buy $20 million of this loan?

They're doing deep credit analysis. They'll read through the financial statements, build their own models, analyze the company's cash flows. They're asking: Can this company service its debt? What happens if a recession hits? What's the recovery value if it goes bankrupt?

Way more. Bankers are structuring deals and client-facing. Credit investors are heads-down doing research. They might spend two weeks analyzing one credit before deciding to invest. They're reading every line of the credit agreement, running stress tests, comparing it to competitors.

Much better than banking. Maybe 50-60 hours a week instead of 80. The pay is still great—analysts make $100-150k, portfolio managers can make $300k to $1 million+, depending on performance bonuses.

Yeah, if they pick good credits that make money, they get a big bonus. If their loans default, well... not so much.

That's where trading and syndication come in. These are the market makers.

So imagine your cousin's team arranges that $350 million loan. On day one, maybe only $200 million gets sold to investors. The syndicate desk is responsible for finding buyers for that remaining $150 million. They're calling up credit funds saying, "Hey, we've got this loan, are you interested?"

Syndication is for new deals—primary market. Trading is for existing debt—secondary market. Say a hedge fund bought $20 million of that loan six months ago and now wants to sell it. They call a trader, who finds another fund willing to buy it.

Exactly! They make money on the bid-ask spread. They might buy the loan from one fund at 98 cents on the dollar and sell it to another fund at 98.5 cents on the dollar. That half-cent spread is their profit.

It is! They're managing huge positions, making split-second decisions, and if the market moves against them, they can lose millions. But the pay is excellent—$150-250k for analysts, $300k-$1 million+ for senior traders. And honestly? They need to be quick thinkers, comfortable with risk, and have thick skin. The trading floor is not for everyone.

Yes! Direct lenders. These are usually private credit funds—think Apollo, Ares, Owl Rock. They lend directly to companies without going through the syndicated market.

Speed and certainty. If you're doing a $100 million LBO and you go the traditional route, your investment bank has to market it to 50 different investors. That takes weeks and the deal could fall apart. With a direct lender, you negotiate with one firm, they commit the whole $100 million, and you're done in days.

It is, but companies pay for that convenience—direct loans usually carry higher interest rates. And direct lenders can demand more control—stricter covenants, more reporting requirements.

It's entrepreneurial. You're out there originating deals, building relationships with private equity firms and companies. You're basically a combination of investment banker and credit investor. You source the deal, you underwrite the risk, you structure the terms, and you hold it on your balance sheet.

Good! Analysts make $120-180k, senior originators can make $300-600k. It's less than banking but with better hours—maybe 60 hours a week instead of 80.

That's where restructuring professionals come in. These are the people who work with distressed companies.

Some are lawyers, but most are bankers or advisors. Let me give you an example. Say that manufacturing company we talked about loaded up on debt, and now sales are down 30% because of a recession. They can't pay their debt.

Not necessarily. First, they hire a restructuring advisor—maybe from Houlihan Lokey, Lazard, or PJT. That advisor sits down with the company and the lenders and says, "Okay, how do we fix this?"

Maybe they negotiate with lenders to extend the maturity dates, reduce interest rates, or convert some debt to equity. Maybe they sell off a division to raise cash. Maybe they do an out-of-court exchange offer. The goal is to avoid bankruptcy if possible.

Right. If they can't reach a deal, the company files for Chapter 11. Then the restructuring advisor helps them through the bankruptcy process—working with creditors, creating a reorganization plan, maybe selling the company in bankruptcy.

It is! These people need to understand bankruptcy law, tax law, complex capital structures, and negotiation. They're dealing with fights between different creditor groups—senior lenders vs. bondholders vs. equity holders. Everyone's trying to maximize their recovery.

It's similar to investment banking because the hours can be just as brutal when you're in an active restructuring. Analysts make $150-200k, VPs make $400-800k. And it's intellectually fascinating—you're solving really complex problems.

Yeah! Loan operations. These are the people who make sure transactions actually happen.

Alright, so your cousin's team arranges a $350 million loan. Everyone agrees to the terms, documents are signed. But someone actually has to execute that transaction—move the money, record the ownership, handle the paperwork.

Exactly. They're processing the loan closing, maintaining records of who owns what, handling interest payments, processing transfers when investors buy or sell loans. They're making sure every detail is correct—because if you wire $350 million to the wrong account, that's a really bad day.

Way less stressful. It's a 9-to-6 job most days, maybe 50 hours a week. But you need to be detail-oriented and process-driven. One small mistake can blow up a transaction.

More moderate. Analysts make $60-90k, senior managers make $150-300k. It's not investment banking money, but it's a solid career with much better work-life balance.

Exactly! Operations is where people go when they want to stay in the industry but have a life outside work.

That's credit risk management. These folks sit at banks or big institutional investors and monitor the whole portfolio.

Everything. Let's say a bank has $10 billion in leveraged loans. The risk team is asking: Are we too concentrated in one industry? What happens if retail crashes? What if interest rates spike? They're running stress tests constantly.

Yeah. "If we have a recession like 2008, how many of our loans default? What's our potential loss?" They're modeling worst-case scenarios and making sure the bank has enough capital to survive.

It is! After 2008, regulators got really serious about this. Risk management went from being a back-office afterthought to a critical function. These people set limits on how much the bank can lend to any one company, any one industry, any one credit rating.

It's analytical and quantitative—lots of modeling and data analysis. You need to understand credit, but also statistics and regulatory requirements. You're presenting to senior management and regulators.

Moderate compared to front-office. Analysts make $80-120k, Chief Risk Officers at big banks can make $200-500k. Better hours than banking—maybe 50-55 hours a week.

Then you'd go into corporate treasury. These are the people at operating companies—like Apple, Ford, Target—who manage the company's debt and relationships with lenders.

Exactly! When your cousin's team is pitching a financing package to a company, they're pitching to the treasury team. The treasurer decides whether to take that deal or go elsewhere.

They manage all the company's debt—making sure they have enough liquidity, executing refinancings when rates are favorable, maintaining relationships with banks. If the company has a $2 billion credit facility that's expiring, treasury is negotiating the new one.

You need to understand debt markets and structures, but you also need to understand the company's business. You're advising the CFO on capital allocation—should we issue bonds to fund an acquisition? Should we pay down debt or invest in growth?

Much better than banking. Maybe 50 hours a week, and you're not working weekends unless there's a crisis. You're in a corporate environment, not a trading floor.

Analysts make $70-110k, directors and VPs make $150-350k. Treasurers at big companies can make $300-700k+. It's not investment banking money, but it's solid compensation with a good lifestyle and job security.

Right.

Yep.

Uh-huh.

Correct.

Exactly.

Right.

Yes.

You got it!

"He helps private equity firms and companies raise hundreds of millions of dollars in debt financing for acquisitions. He's basically structuring billion-dollar transactions and working with the biggest lenders and investors in the world."

Exactly. Your mom will be impressed now.