What it does
Leveraged finance is the team at Crédit Agricole CIB that arranges debt for companies which already carry a lot of it, most often because a private equity fund has bought them. Private equity funds buy whole companies with a mix of their own money and borrowed money, and that borrowed money is what this team provides. Inside the bank the group is called Corporate & Leveraged Finance. It finds these deals, advises on them, structures the debt and carries them through to completion, either as loans sold on to banks and institutions or as high yield bonds, which pay more interest because the borrower is riskier. Its clients are private equity backed companies and large corporate borrowers, including those in technology, media and telecommunications.
It differs from the bank's other lending teams in what it lends against. Structured finance builds a loan around a specific asset such as a ship or a power plant and is repaid from what that asset earns. Debt capital markets helps borrowers sell bonds to investors. Leveraged finance lends against the cash flow of a whole business that is already heavily indebted, so the work is about judging how much more debt the company can bear and whether it can keep paying interest if trading turns down. The team also looks after the loans the bank already holds, following how each borrower is trading and handling requests to change loan terms.
A junior splits time between live deals and that portfolio. On a deal you research the sector, pull together comparable transactions and their pricing, build the model that tests the company's ability to service its debt, and read the information memorandum, the document that describes the company to its lenders, alongside the business plan and due diligence reports. You help draft the credit application, the paper that asks the bank's credit committee to approve the loan, and prepare pitch materials for private equity firms. On the portfolio you analyse borrowers' accounts, write annual reviews and run know your customer checks on new clients. London takes interns into the team for 12 months.