CONFIDENTIAL

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An Insight into Investment Banking.Leverage
Finance
Leon Grant Associate European Leveraged Capital
Markets

CONFIDENTIAL
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Société Génerale Organisation Overview

• Retail Banking and Financial Services
• Serves 27 million individual customers worldwide
• Global Investment Management and Services
• One of the largest banks in the euro-zone in
  terms of assets under management (EUR 371
  billion, September 2008) and under custody (EUR 2
  744 billion, September 2008).
• Corporate and Investment Banking
• A leading player in its three areas of excellence
  Euro Capital Markets, Derivatives, Structured
  Finance

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Organisation Overview
Corporate Investment Banking
Midcaps Investment Banking (BIEN)
Client Relationship Management
Corporates, Institutions and Advisory (CORI)
Issuer Business Solutions
Investor Business Solutions
Capital Raising and Financing (CAFI)
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Capital Raising and Financing Businesses
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Four key loan market segments

• Leveraged corporate market
• Borrower is lower quality, below BBB-/Baa3 if
  rated
• Borrower more indebted higher debt to EBITDA,
  or in difficulty
• Loan pays margin of 150 bps over LIBOR or more

• Investment grade market
• Borrower is good quality credit
• Borrower is rated BBB-/Baa3 or better, if rated
• Loan pays a relatively low margin over LIBOR

• Leveraged Buy Out market
• Subset of leveraged loan market, with similar
  characteristics
• Company bought by private equity sponsor
• Deal structure carries high levels of debt to
  EBITDA

• Secondary market
• Loans are bought and sold at a percentage of face
  value after primary syndication closes
• European market still developing, but becoming an
  increasingly important part of risk management

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The Leveraged Capital Markets team Leveraged
Loan Syndicate and High Yield Capital Markets

• Type of Borrower leveraged companies with a
  sub-investment grade rating and Non Investment
  grade rated (Ba1/BB or below) bond issuers
• Type of loans and bonds LBO, leveraged loans,
  High Yield bonds
• Geographical scope Western and Central Europe
• Role
• Origination, structuring and execution of High
  Yield bond issues by European issuers
• Syndication of leveraged loans (senior bank debt,
  mezzanine loans, PIK loans)
• Work closely with the Business Lines originating
  those type of deals (mainly leverage finance and
  Media Telecom)
• Act as an intermediary for dedicated sales force
• Manage the underwriting position

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Effect of the Credit Crunch on our business
Shutdown in CLO issuance
Huge overhang of LBO papers
Liquidity Crunch
Secondary prices fell dramatically
Limited appetite from investing banks
Overall loss of confidence paralysis
Readjustment of credit risk appetite
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Typical Day Leveraged Capital Markets Associate

• 8.15 - 9.00 Daily European Capital Markets
  meeting. In this meeting we discuss key
  trends/events that have occurred in the market
  over the past 24 hours
• 9.00-10.00 Check and respond to the various
  emails that I have received through the night and
  early morning (however having a Blackberry has
  meant that you can now do this when you return
  home so now you are always connected)
• 10.00-13.00 Research and prepare a pitch for a
  key client, detailing our capabilities and ideas
  for our clients needs
• 13.00-1400 Grab some lunch at the desk and
  attend our Global Leveraged Finance Conf call
• 14.00-15.00 Ring my investors to understand
  their latest needs and requirements for future
  deals
• 15.00-19.00 Start preparing an Information
  Memorandum for our investors
• 19.00-20.00 Submit document to Desktop
  publishing whilst finalising any last minute
  changes
• 20.00- 20.30 Grab some food and head home.

Information Memorandum A document prepared in
connection with a proposed credit facility
containing details of the borrower, its business
and financial condition, and a description of the
proposed transaction.
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Typical Day Next Year Leveraged Capital
Markets Associate

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Educational Background of the Investment Banker
Finance / Economic Degrees
Science Degrees
Mathematics Degrees
Engineering Degrees
Management Degrees
Varied Academic Backgrounds
Language Degrees
Art Degrees
Social Science Degrees
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Educational Background of the Investment Banker
MBA
Accounting Exams E.g. ACA, ACCA, CIMA
Financial Services Authority Exams
Professional Qualifications
Acturial Exams
Master Degrees
Chartered Financial Analyst Exams
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Personality / Qualities of an Investment Banker
Mathematical
Meticulous
Confident
Impervious
Motivated
Key Qualities
Honest
Committed
Analytical
Genuine Interest in the Industry
Tireless
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Recommendations

• Books
• Liars Poker by Michael Lewis
• Monkey Business by John Rolfe
• The Wolf of Wall Street by Jordan Belfont
• The Black Swan The Impact of the Highly
  Improbable by Nassim Nicholas Taleb
• Websites
• www.efinancialcareers.co.uk
• http//news.bbc.co.uk/2/hi/business/default.stm
• http//www.investopedia.com/dictionary/default.asp
  
• www.forbes.com
• Newspapers
• The Times
• Financial Times
• The Economist

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Q A