“Leveraged Finance Jobs Pulled Ahead of Q3 Layoffs”
If you’re looking for a new job in investment banking in the second half of this year, you may need to search a little more than before. Headhunters and bankers who have taken the plunge say the job market is softening as earnings fail to come through.
This is particularly noticeable in areas such as equity capital markets and leveraged finance, where this year’s earnings were expected to be strong but fell short of expectations. Leveraged finance issuance in May 2022 was at its lowest level since the chaos of March 2020 as war, rising interest rates and widespread anxiety took their toll.
Speaking off the record, a US-based director in leveraged finance origination says he has seen jobs in the field being cut over the year. “I know a few banks had planned to add senior executives this year, but they pulled the roles. The market is quiet.”
2021 has been an epic year for European leveraged loan issuance, with $0.15 trillion in loans issued according to the S&P, more than double the amount in 2020. This year, the European market has grown withered under fear of rising borrowing costs. It doesn’t help that the banks are struggling to offload nearly $4 billion in debt associated with the $9 billion purchase of Morrisons Supermarkets at the end of 2021. It also doesn’t help that the European Central Bank (ECB) has imposed additional capital charges on banks like Deutsche over concerns that lending will deteriorate in a rising rate environment. In a note published today, Jim Reid Deutsche’s head of thematic research, predicts that the next recession will begin at the end of 2023 and after that “defaults will begin to rise again structurally, unlike the past two decades.” . In 2025, Reid predicts that US high-yield debt defaults will peak at 10% and the “ultra-low defaults” landscape will come to an abrupt end.
Some banks are going against the trend. Credit Suisse CEO Thomas Gottstein said in April that the bank would add talent in the leveraged finance, mergers and acquisitions and equity markets this year. David Miller, head of investment banking and capital markets at Credit Suisse, said today that the bank is “back” and highlighted its various activities in the US leveraged finance market this year, including the takeover of McAfee Corp, Apollo’s takeover of Novolex, and his leading a $3.35 billion buyout loan for software company CDK Global Inc.
While Credit Suisse may move ahead in the US, however, headhunters have confirmed that hiring activity is down for leveraged finance in Europe. “Only essential hires are approved,” one said. “Lower fees affect sentiment very strongly and it takes a strong argument to hire someone. They will make replacements, but preferably at lower cost.”
With staffing limited, the creative director said existing staff were forced to work harder to fill in the gaps. “If we are in a similar situation in September, jobs will be lost,” he said. The headhunter agreed: “It’s a prelude to the cuts in the third quarter.”
Click here to create an eFinancialCareers profile. Make yourself visible to recruiters who are hiring for the best jobs in technology and finance.
Have a confidential story, tip or comment you’d like to share? Contact: [email protected] first. WhatsApp/Signal/Telegram also available (Telegram: @SarahButcher)
Be patient if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans may be asleep or away from their desks, so your comment may take a while to appear. Eventually, it will – unless it’s offensive or defamatory (in which case it won’t.)
Photo by Bernd Dittrich on Unsplash