Leveraged finance involves the use of debt to finance corporate transactions. It sits at the intersection of investment banking, commercial banking, hedge funds, private equity, and debt capital markets. Leveraged finance taps into the high-yield bond and leveraged loan markets to provide financing for transactions like leveraged buyouts, debt refinancings, and corporate restructurings. It has been a major profit center on Wall Street and a key training ground for careers in private equity and hedge funds.
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Top 7 Healthcare Trends and Challenges for 2015 - From Our Financial ExpertHealth Catalyst
As the healthcare industry moves closer to value-based care, there are a lot of projections about the changes that will occur in 2015. This article discusses seven of the top trends the industry is focused on: (1) physicians start to feel the financial impact of CMS’s rules; (2) the use of technology in healthcare is exploding; (3) financial viability is a key concern for CEOs; (4) reducing exposure to risk performance is becoming more important; (5) interest in population health management continues to grow; (6) outcomes improvements will continue to increase; and (7) collaboration between providers and payers will increase.
Italy is the first Country to fully implement a complete legal framework for equity crowdfunding, with very interesting features and an international vocation, allowing people from all over the world to crowdfund in Italy.
Top 7 Healthcare Trends and Challenges for 2015 - From Our Financial ExpertHealth Catalyst
As the healthcare industry moves closer to value-based care, there are a lot of projections about the changes that will occur in 2015. This article discusses seven of the top trends the industry is focused on: (1) physicians start to feel the financial impact of CMS’s rules; (2) the use of technology in healthcare is exploding; (3) financial viability is a key concern for CEOs; (4) reducing exposure to risk performance is becoming more important; (5) interest in population health management continues to grow; (6) outcomes improvements will continue to increase; and (7) collaboration between providers and payers will increase.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Ethnobotany and Ethnopharmacology:
Ethnobotany in herbal drug evaluation,
Impact of Ethnobotany in traditional medicine,
New development in herbals,
Bio-prospecting tools for drug discovery,
Role of Ethnopharmacology in drug evaluation,
Reverse Pharmacology.
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
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The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
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Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
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Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
CLASS 11 CBSE B.St Project AIDS TO TRADE - INSURANCE
Career Guide Leveraged Finance
1. The media’s watching Vault!
Here’s a sampling of our coverage.
“For those hoping to climb the ladder of success, [Vault’s] insights
are priceless.”
– Money magazine
“The best place on the web to prepare for a job search.”
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– Fortune
“[Vault guides] make for excellent starting points for job hunters
and should be purchased by academic libraries for their career
sections [and] university career centers.”
– Library Journal
“The granddaddy of worker sites.”
– US News and World Report
“A killer app.”
– New York Times
One of Forbes’ 33 “Favorite Sites”
– Forbes
“To get the unvarnished scoop, check out Vault.”
– Smart Money Magazine
“Vault has a wealth of information about major employers and job-
searching strategies as well as comments from workers about their
experiences at specific companies.”
– The Washington Post
“A key reference for those who want to know what it takes to get
hired by a law firm and what to expect once they get there.”
– New York Law Journal
“Vault [provides] the skinny on working conditions at all kinds of
companies from current and former employees.”
– USA Today
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7. ACKNOWLEDGMENTS
We are extremely grateful to Vault’s entire staff for all their help in the
editorial, production and marketing processes. Vault also would like to
acknowledge the support of our investors, clients, employees, family and
friends. Thank you!
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11. Vault Career Guide to Leveraged Finance
Table of Contents
Commercial Banks and Commercial Finance Companies . . . . . .90
Chapter 9: The Leveraged Finance
Career Path 95
Analyst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
A Day in the life of a Leveraged Finance Structuring/
Origination Analyst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
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A Day in the Life of a Leveraged Finance Structuring/
Origination Associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Managing Director/Group Head . . . . . . . . . . . . . . . . . . . . . . . . .107
Final Analysis 111
About the Author 112
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CAREER
LIBRARY xi
12. Introduction
Right now, it seems like every other headline in The Wall Street Journal is a
blockbuster M&A event, a multi-billion dollar LBO, or a rise from
bankruptcy by a fallen corporate angel. Much as they did in the late 1990s,
both investors and corporations have cash burning holes in their pockets
because of positive economic conditions, and are subsequently pushing the
financial markets near new heights. Like the late 90s, the result is record
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M&A activity, a boom in hedge fund activity, a rise in venture capital
spending, a return to the buyout activity of the late 1980s, and a general
feeling of excitement on Wall Street. But unlike the late 1990s, this flurry of
financial activity is somewhat tempered, as today bankers distinctly
remember the subsequent massive economic downturn of only a few years
ago and its effects on global financial markets. Nevertheless, the major forces
that have spurred this investment activity, such as historically low interest
rates, low credit default rates, and healthy cash balances are making Wall
Street an exciting place to be.
Because of low interest rates, relatively few bankruptcies, and investors’
hesitation to invest in the equity markets, no area has seen more activity than
debt markets. This activity has manifested itself into record global
borrowings, as global credit issuance is expected to exceed $7 trillion in
2006, dwarfing its $2 trillion level in 1995 and far surpassing its $4.5 trillion
level in 2005.
A vast majority of this activity has been spurred by the field of leveraged
finance. With financial institutions eager to lend money and borrowers
excited to capitalize on market conditions, the effects in just the past few
years are easily identified: the second, third, and fourth largest LBOs of all
time, record fundraising by hedge funds and private equity shops, M&A
activity levels reaching the highs of 1999/2000, all-time-low borrowing costs
for companies, and off-the-charts volume in the high-yield bond and
syndicated loan markets. For all of these reasons and many more that we will
discuss in this Vault Guide, leveraged finance is a good place to be.
Visit the Vault Finance Career Channel at www.vault.com/finance – with
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14. LEVER
CHAPTER 1
AGED
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THE SCOOP
FINAN
Chapter 1: The Background of Leveraged Finance
Chapter 2: Major Industry Players
Chapter 3: The Products
Chapter 4: Leveraged Finance Groups
Chapter 5: The Transactions
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16. The Background of
Leveraged Finance
CHAPTER 1
The financial markets can be divided into two major sections: debt and equity.
Under this overarching organization structure, think of leveraged finance as
the intersection of investment banking, commercial banking, hedge funds,
private equity, and sales & trading on the debt side of the financial markets.
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Generally speaking, leveraged finance is a platform in all major investment
and commercial banks. It is a function that taps into two major financial
markets (the high-yield bond market and the leveraged loan market—more on
those later), is accessed by nearly all private equity shops and hedge funds on
a regular basis, and has been one of the booming profit centers of Wall Street
for the past two decades. For analysts and associates, it has become a prime
training ground for the most elite private equity shops and hedge funds.
Subsequently, for careers on Wall Street, leveraged finance is one of the most
sought-after fields.
Why leveraged finance?
Along with its role as a potential springboard to careers in private equity and
hedge funds, leveraged finance is also unique from a career perspective
because it provides a vantage point into most of the other areas of investment
banking, as well as sales & trading. For analysts and associates, working in
leveraged finance allows one to see what else is out there career-wise in the
financial markets, without ever having to leave the field.
Another advantage of working in leveraged finance is that in general, it is an
area of investment banking that is focused on closing transactions. In a
corporate finance role within a coverage team in an investment bank (a team
that covers a specific industry and pitches deals to companies in that
industry), one analyst might close one or two deals a year in an investment
bank. By contrast, in leveraged finance, it’s feasible to close five to 10
transactions a year. Leveraged finance affords analysts and associates a
continually busy pace and good deal and client exposure along the way.
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18. Vault Career Guide to Leveraged Finance
The Background of Leveraged Finance
Standard & Poors (S&P) Moody’s
AAA Aaa
AA+ Aa1
AA Aa2
AA- Aa3
A+ A1
A A2
A- A3
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BBB+ Baa1
BBB Baa2
BBB- Baa3
BB+ Ba1
BB Ba2
BB- Ba3
CCC+ B1
CCC B2
CCC- B3
B+ Caa1
B Caa2
B- Caa3
CCC Ca
C D/C
D C
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20. Vault Career Guide to Leveraged Finance
The Background of Leveraged Finance
Ratings determine access to financial markets
Of course, there are advantages to being investment grade. Since investment
grade companies are consider much less risky, they have the ability to access
a number of other financial markets, including the commercial paper market.
Furthermore, these investment grade companies are typically able to get
much larger amounts of debt than their leveraged counterparts. For example,
as a triple-A rated company, General Electric has syndicated loan facilities of
over $20 billion, not to mention any other debt, such as bonds or commercial
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paper. In contrast, the largest syndicated loan package for a leveraged
company is probably somewhere near $6 to 8 billion.
It is important to note that entire financial markets exist for companies in both
of these buckets (investment grade and leveraged). When it comes to bonds,
there is a high grade market for investment grade companies, and a high-yield
market (also known as junk bonds) for leveraged companies. For loans, there
is a high grade syndicated loan market (also known as the investment grade
syndicated loan market) for investment grade issuers and a leveraged loan
market for those companies that are considered leveraged.
For companies that are not rated, their access to either market is determined
by their financial ratios, while crossover companies typically access the
market that plays to the better of their ratings.
The field of leveraged finance is concerned with riskier companies that
typically seek funded debt as a necessary piece of their capital structures.
Because syndicated loans and high-yield bonds are necessary for these
companies’ operations, leveraged finance can be a little more exciting and
adventurous. In the leveraged finance world, you will encounter companies
that put together comprehensive financing packages to exit bankruptcy just
hours before a federal court would have forced them to liquidate, private
equity shops that push the limits of corporate finance by strapping nearly
incomprehensible amounts of debt on companies, multinational corporations
avoiding hostile takeovers by issuing large amounts of debt in order to
execute share repurchase plans, and well-known organizations that need
every single dollar available to them in order to keep their lights on and
factories working. These types of complex transactions are part of the day-
to-day life of those working in leveraged finance.
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22. Vault Career Guide to Leveraged Finance
The Background of Leveraged Finance
opened up the syndicated loan market, but it also made other financial
markets more transparent, due to the emergence of the relative value of
products across asset classes. Although still issued in a very small number of
situations, the bilateral loan for the multi-billion corporation is now
essentially obsolete.
The bond market
In addition to being able to take out loans from banks, companies that are
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large and stable enough have historically also had access to public bond
markets. To do this, companies enlist investment banks to issue bonds to
investors that promise a set interest rate of return on investment. Investors
independently analyze the company issuing a bond and determine the interest
rate that makes it worthwhile for them to take on the risk of the company not
making its scheduled payments. If acceptable to enough investors, the bond
is issued; these investors have essentially lent the company money through
this bond issuance.
Being able to issue bonds has made it possible for companies to raise money
for acquisitions, to invest in capital projects, or to refinance existing debt.
Together, the bond and loan represent the major financial instruments in the
world of leveraged finance.
The expanding market of debt
The bond and the syndicated loan markets have also evolved and expanded
over the past few decades. In 2005, the U.S. syndicated loan market reached
issuance volumes near $1.6 trillion, nearly doubling its $800 billion volume
in 1995. In 2005, the high-yield bond market also more than doubled in
volume in the past 10 years, reaching approximately $100 billion, versus $40
billion in 1995. A vast majority of this evolution is due to exceptional credit
conditions, fewer bankruptcies, record low issuance rates, and the relative
value of the asset classes as investment areas for institutional investors.
This relative attractiveness of the debt markets is especially strong in light of
the equity market downturn in the early 2000s. With security and near-
guaranteed returns, the debt markets have seemed exceptionally more
attractive from an investment standpoint. If you knew that you could get 7 to
10 percent annual return investing in the loan of a relatively stable company,
wouldn’t you put your money there, as opposed to buying shares in the equity
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24. Vault Career Guide to Leveraged Finance
The Background of Leveraged Finance
small lending shops are finding themselves with a few million dollars in fees
and profitable new relationships.
In the future, this trend is expected to continue. Although interest rates have
been rising over time, this will not deter companies from continuing to seek
syndicated loans and high-yield bonds, which have become a necessary part
of a firm’s capital structure. Although it will be unlikely that firms will want
to refinance their existing debt with more expensive (higher interest) debt,
many issuers will still turn to these financing sources for general corporate
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needs or to acquire other companies. Also, with the rise of interest rates has
come a rise in M&A volume, which fuels the issuance of debt to make those
mergers and acquisitions happen. Finally, to quote a tenet of basic corporate
finance, the cost of debt is often substantially less than the cost of equity. So
it seems likely that these leveraged finance shops will remain in business and
profitable for many, many years to come.
The leveraged finance markets are quite complex, but the underlying
principle and motivation—providing financing for companies—is simple.
Whether this financing involves a loan to refinance existing debt, or the
issuance of a complex loan and high-yield bond package in order to execute
the largest LBO of all time, these markets are quite often at the center of the
action on Wall Street. Companies still call their banks and loan officers for
advice on syndicated loans, but at the same time are now speaking to
managing directors at investment banks that can provide a number of
complex financing alternatives, tapping a variety of financial markets. With
nearly $1 trillion of combined annual global volume in the U.S. in the
leveraged loan and high-yield bond markets, these leveraged finance markets
provide ample access for investors to put money to work.
Leveraged Finance vs. Corporate
Finance/Investment Banking
Are the leveraged finance and investment banking the same animal? Sort of.
As leveraged finance was originally a commercial banking function, most of
the premier leveraged finance shops can be found within the investment
banks of the largest finance institutions, such as JPMorgan Chase, Bank of
America, and Citigroup. Because of the sheer amount of leveraged finance
deal volume at these institutions, there will typically be entire floors and
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