Debt Capital Markets (DCM) Explained

Welcome back to The Deal Room, and we have responded to your requests. This is a special episode almost because we do see indeed your comments that you leave on Spotify for our episodes, and we had two requests of which we are going to address today. So the first one was Minh Tran, who asked specifically, wanted to hear about secondary markets. So if you want to own a bit of a slice of SpaceX or OpenAI, Steven's going to explain how potentially you could and maybe why you shouldn't. And so we'll dive into that subject. And then we had a question from Jen. I feel like I should know the location here. It doesn't show that on Spotify because it, I feel like on a game show, I'd be like, Jen from Northamptonshire says, what, what's a career and what is debt capital markets all about? And so DCM is something which I think, um, is probably not the first thing that students think of when they think, I want to work at an investment bank. So Steven, I know you're going to explain about what it is, how it differs from the equity capital markets. I know we talk about a lot on this show. How it's different from other parts of the business. So again, terminology-wise, things you might hear as a student, corporate banking, leverage finance. So what are these and how are they different? But importantly, these are big centers of revenues for big bulge bracket banks, thinking JPMorgan, Citi, others as well. So it's an important area that probably doesn't get enough of the limelight. So perhaps we can, perhaps Stephen, you can convince a few people to think in that that direction. But look, I know you've been super busy. I know that, I think the last episode that we did, you were feeling slightly unwell and I feel a bit guilty of squeezing you for my pound of flesh to try and get you on another show when you're not fully recovered yet.

No worries at all, Ant. Thanks for having me on. Yeah, I've been doing a tour of the banks and their spring insight weeks. I know you've been at a couple as well. One of the things that we do here at Amplify is we go out and we try and do events and experiences that give young people in their spring weeks or their internships or whatever it might be, a real on-the-desk experience of that particular role in finance. So, you know, we've been doing sales and trading simulations and we've been doing M&A simulations, credit and lending simulations. We launched a universal bank simulation last week, which took students through the arc of an engagement between a company and a bank all the way from opening first accounts to selling to private equity post-IPO. So we've been doing a lot of good stuff and, and I tell you what, we've been getting quite a lot of love for the podcast. So I'm going to shout, I'm going to shout out to two people, one, maybe even three. Here we go. Firstly, to Joe Checkley, who's on the Bank of America Spring Insight Week. So he listens to us when he's doing the washing. So if you're washing the dishes, hello, Joe. Secondly, to Faber, who I've seen a few times over the last couple of weeks. He's always willing to share the podcast with as many people as possible. And then finally, to the person whose name I didn't get, But I don't know if this has ever happened to you, and he wanted my photo. He wanted my picture, and that made me feel special.

Yeah, it's, uh, I would love to say we are so proud to be number one in the UK podcast charts, but, uh, evidently that's not quite the case.

So, uh, not quite there yet. And I think the other thing, I think he thought I was Piers. So, you know, I'll let that one go.

But is there any, um, I guess something that could be taken away from the experience you've just had, particularly the last week or two? Is there anything that you could share perhaps with the community more broadly that was an observation, something that stood out to you, something that really helped, could help other people?

Yeah, I mean, if you are at an age where you are still eligible for a Spring Week, whether it's you've got a 4-year course and you're beginning, you're going into your second year, or whether you're still at school and you're thinking about what happens in the first year at university. I mean, one of my takeaways is just, you've got to get on one of these things. They're amazing. Just in terms of the breadth of engagement that you have with all different areas of the bank. They treat you really quite well. You know, they want, they're trying to sell you the bank as much as you're trying to sell them you. So it's, you know, they pull out all the stops. There's one bank that we were with, they were at the National Portrait Gallery at a private event on the Monday night, and it was Yeah, it was really, really good. So get on one if you have the opportunity to. I think the second thing that I took away was in the world of investment banking, we're going to talk about this later on in the world of investment banking. There are a couple of areas that just get so overlooked. And one of them is debt capital markets. And we're going to talk about that later, but one of them is, it's called global corporate or global corporate relationship management, whatever it is. It's basically, there are teams within banks. That own the relationships between the bank and the company, the relationship managers. And these roles can be either at a business banking level or at a kind of mid-market level or at the biggest level. And you're part of IBD, but your client list might be NVIDIA, Amazon, Nike, whatever it might be. And you're not a product specialist, but you're there to own the relationship and direct them to the different teams. And I just sensed that when I was at these spring weeks, everyone was very surprised that that thing exists, that it existed because it's not a product. So why would they know about it? But it's also an extremely exciting area of the bank and want to check out. And then the third thing, there's some good stash, some good swag going on at these banks. Everyone was really kitted out. I saw rucksacks and, you know, very nicely recycled pads of paper and bottles and all of this stuff. I tried to steal a bit for my wife. Got lucky on a couple of occasions.

Well, my best experience in the recent days was I was at Bank of China and I was reliably informed by their staff that it's been ranked the third best Chinese food in London in their canteen. And so I insisted I got taken to lunch as I would do. And Yeah, it was pretty, pretty good, to be fair. So, uh, yeah, it's my—

I think it's my sandwiches. But anyway, yeah, yeah, let's jump in.

Maybe let's go with the secondary markets. And I, I don't want to assume any knowledge really, so perhaps you could start with just pitching of what this is first, and then we can go into it a bit more detail.

Yeah, so when we talk about the secondary markets Whenever we talk about the secondary markets, we need to distinguish between the secondary markets and the primary markets. The primary market is issuance. Whenever there is something that wasn't there before and has now come to be, that is the primary market. So whether that is a new debt issuance, whether that is a new equity issuance or an IPO, or whether that is a new fundraising when new shares are created in the private or venture market. That's a primary issuance. As soon as that thing is issued and is out in the ether, whether it is a share or whether it is a bond, that thing goes into the secondary market where you can trade that share or that bond. Now in public markets, for example, you know, listing on the New York Stock Exchange, the secondary market is the thing, right? It's where buyers and sellers come together to establish a price. There's liquidity and it's what you talk about every every Friday and it's very exciting and there's price discovery because it's a huge, huge market. That's the way that the public secondary market works. The same goes on in debt capital markets, public bond issuance, lots of buyers and sellers establish a price, and that's how this thing works. So what happens when there is a private company share that is owned by an investor or a founder or an employee, and they want to get rid of that. They want to sell that share. They want to realize a liquidity event, but they're a private company. Now, this is where the private secondary market comes into play. And this is a thing that's only really been— it's not even really a thing at the moment, but it's only really been a thing for the last few years as companies have delayed and delayed and delayed going public. Back before the dot-com bubble, if you were anything, as soon as you were at any size or scale, you'd go public so you could get access to that value creation. Now these companies are waiting longer and longer and longer. And if you are an early investor or an early founder, you might want to get out of some of that position. You might want to sell those shares on the secondary market, but how do you do that? Because there is no traded secondary market for private company shares. You can't log onto your brokerage account and start buying and selling shares of SpaceX or OpenAI just like that, right? There's no price discovery, there's no bid offer that just doesn't exist. So this, when you come to selling your shares in the secondary market, It's super opaque and it's usually done through a relatively costly wealth manager or mediator going, hey Steven, you were an early employee in Facebook. I know you want to, or whatever, you're an early employee in OpenAI. I know you want to offload $5 million worth of your shares. I'm going to go and dial around and find a potential buyer. And that is how it's always worked. Super opaque. No price discovery, valuation often based on the last primary issuance, the last fundraise. But per the question, it's getting a lot more scrutiny and it's getting a lot more interest. As I said, as these companies are taking longer to IPO.

Was this something I remember we talked about a few weeks ago, Morgan Stanley, was it their wealth management division of a client of a certain magnitude could open like access to some of these opportunities.

Yeah, absolutely. So Morgan Stanley have just opened their private markets kind of trading service. And again, we use these terms relatively loosely. Is it a market? Not sure. Is it trading? Not really. It's buying and selling private market shares in a relatively opaque and closed way. And there are certain companies, there are certain companies that are trying to make this private share sale thing look more like the public markets. So if you go to a, one of the case studies I was looking at, it's a company called Forge. I don't know if you've ever come across these guys. So Forge, if you go onto their website, so Forge is known for buying and selling or for a marketplace where you can buy and sell pre-IPO companies. So private companies buy their shares before they IPO. If you go on their website, there's like a stock ticker thing going across the top with all the private companies.

I can see what they're doing.

Yeah, you can see what they're doing in a little red sign if it's gone down. But because there's no market, that could be 3 years old. That could be the last time that there was a pricing event where they raised, where that company raised money. So they're trying to make it look and feel like a public market, like a public secondary market where Actually, if you go onto Forge, firstly, you need to be an accredited investor. It's over $1 million of assets or $300K of revenue, of salary or income every single year. B, it's still pretty opaque. It's still pretty, all right, I'm interested in this company. Can you broker me a deal for someone that might be on the other side? So really kind of really old school relative to what's going on in public markets at the moment. And the fees are super high as you were going to say.

What's the fee structure at that? Sounds like incredibly beast boat?

I think it's about 4.5%. Someone could dial in and let me know if I'm wrong. But that was the number that I, that I remembered. My eyes slightly popping out thinking, gosh, all right, you want to get involved in these companies, then Forge is one way of doing it. But just a couple of stats on Forge. And by the way, just before I push on Forge, obviously the private market consists of everything from very early-stage venture through to private equity. So if you wanted to get involved in super early-stage venture, check out Seedrs. So Seedrs is an equity crowdfunding platform, and they actually have a secondary market where once you've bought, you can sell. You can sell again. I don't think there's a lot of value there. Private equity has a kind of starting to establish a secondary market for retail investors. If you go to Moonfare, you can buy and sell private equity funds. But if you wanted to buy and sell the likes of SpaceX and OpenAI, et cetera, Forge is one of the ones you need to look at. Issues. Well, firstly, it IPO'd via a SPAC merger as a corporate entity. It IPO'd via a SPAC merger in 2022. It traded as high as $32 a share in May '22. It's now worth $1.80 a share, generates $70 million of revenue, and on that makes a $90 million loss. Wow. So is this a viable company? Question mark. Is this a viable asset class? Or, you know, would you want to dedicate more than a very, very small percentage to this very, very illiquid very hard to discover the price, opaque, high-fee market? I would say no. I don't know what you think.

Well, I just think that that business model, if the big boys like MS get involved, given they have the client book, they have the capacity from an organizational point of view, the reach, the clout, Everything. Basically they have everything but it better. I don't, I, now that they're pivoting into that direction, I find it hard to see how any of these others will compete.

Yeah, I totally agree. Other ones like EquityZen, yeah, they're probably quite well venture-backed. But if you're thinking, say Forge, $70 million revenue, $90 million of loss. So that's a $160 million cost base per year. And they're trying to start from zero and they've tried to develop all of this technology and they've obviously had to go out and get the regulatory approvals. As you said, Morgan Stanley, and probably just again with a few people with a few telephones, a bit old school, but with a few people with a few Bloomberg terminals or whatever it might be, they can get this thing going and they're already off to the races with a cost base that might be fractions of that. So yeah, I sense your skepticism. But there's another way of getting involved. If you are not an accredited investor and you still want to get involved in the world of private—

now we're talking.

You want to get involved in the world of private pre-IPO share buying and the likes of SpaceX and OpenAI. There is a listed fund out there called Destiny Tech 100 that was in the news yesterday, goes under the ticker P, X, Y, Z. And I think the headline in Bloomberg was Destiny Tech 100 smells a little bit like the meme stock frenzy. So this is an exchange-listed fund that basically gives normal investors like me and you with a few quid access to invest in portfolio of private companies that they've invested in. So they have made £77.4 million worth of investments in the likes of, well, actually I can tell you I've got their portfolio in front of me. SpaceX is 35% of their portfolio. Axiom Space is 9.7%. Boom Supersonic, the supersonic jet company is 4.6%. Epic Games, 4%, et cetera, et cetera. And you can get access to this by buying into the fund on an exchange. Fantastic. However, the meme part is that a couple of, a few days ago, this listed fund absolutely exploded in terms of its valuation. And at one point it was valued at 20 times the value of its underlying assets. So remember, they bought £77 million worth of these private companies, which has actually been marked down to $50.8 million recently. So the fund is actually being traded at 20 times the value, the net asset value of this particular fund, which is madness, right? Total, total madness. Unless you think, unless you have some amazing perception that these companies are going to get 20x uplift. Is SpaceX going to grow by 20x? Bearing in mind that it's already valued at $100 billion, or maybe, but I don't think so.

So, so what, I mean, what is actually, just to explain the mechanics then of, of how that, that has happened. Do we actually know in terms of what's fueled that huge influx of demand?

Yeah, I, yeah, it's a, it's a good question. I think there's, I think there's just the kind of the fact that there's still quite a lot of money looking for, looking for places to put it. Obviously we all, you know, there's a lot of money that wants to get into these types of companies and I think there is an attractive, so there are other listed fund vehicles that invest in private companies. So ARK Venture Fund, if you remember ARK, very famous for its outsized bullish predictions on tech. They have a venture fund which you can invest in, but you, I think there are limited, you can only but you can only take your money out every quarter. It's kind of like a quasi-investment vehicle. It's a little bit different from something that's kind of freely traded like Destiny Tech 100. So maybe there's a structural point there that people are quite liking. But yeah, I think it's a bit meme-y, a bit kind of hype-y. And we've seen this all before. And I've, again, in the same way as I'm not really going to go close to Forge, I'm not really going to go close to Destiny Tech, DXYZ anytime soon. Maybe I'll be proven wrong. Maybe I don't have the stomach for it. But it doesn't seem like a developed enough market. All I want is for more of these companies to go IPO sooner. That's what I, you know, that's where we want to get to. Right. And then you've got the regulatory, you know, they've been through the process. You know that they're legitimate companies. You know that they're decent. And they're reporting every quarter and there's price discovery. Get them on the public markets.

Talking of high P, that very technical word. One thing I did see that I don't know if you have, but it was talking about the, I think it was the Philadelphia Semiconductor Index, which is a very well followed kind of sub-index that people look at when looking at tech and looking at chip makers in particular. And so very much in vogue given the fact that AI and Nvidia and so on and so forth. But there was an interesting European earnings release that came out this morning, which is ASML, and they manufacture tools for semiconductor production. And it wasn't so much that their earnings didn't beat, they did, but the problem was there was a huge drop in bookings yesterday. For their inbound sales, essentially semiconductor stocks including Nvidia actually fell quite sharply on the back of this. That semiconductor index was already in correction, which is actually a 10% move off its highs. So interesting. There was a good headline that the FT Unhedged said, which I thought kind of puts it all together quite neatly. It was saying, is this a blip? Or the first chink in the armor of the great AI narrative. But for me, I think that's slightly trying to hype it up a little bit because I think a stock to go up like NVIDIA has done and to maintain that momentum, as with all of them, not to mention that ASML don't actually make AI-related chips. And so it's a slightly different company in what it does. But yeah, I just thought it was quite interesting with the AI side of things, how it has cooled off a little bit with the media concentration. It would, it would seem.

Yeah. And there's been, again, it's the kind of the Gartner hype cycle. There's a, we're not quite in the trough of disillusionment, but if you read the average FT article now, there's a lot more skepticism. You know, AI got it wrong. Look at AI messing up when I ask it a question. AI can't do all of this kind of stuff. So yeah, there is a, there is definitely a kind of cooling off. I was at a talk last night with a few fund managers and a couple of them were saying, look, actually this does feel quite like '98, '99 where active fund managers did not know what to do because they didn't want to miss out on another 20, 30% of upside, but they just couldn't rationalize piling into these stocks at these valuations. So he's just saying, all right, the last time I saw this, I've been in the fund management business for 30 years and my career started like this.

Well, just to kind of make that make sense. There was a Bank of America, they released a very regular hedge fund managers survey and they asked them about their position holdings, feelings about where we're at at the moment. And it's the highest allocation in equities we've had in 2 years at the moment. And a Citi study was saying that over 80% of those positions now are in a loss because a lot of people obviously coming in trying to then, yeah, not miss out. Have now the markets turned a little bit with the rethink over rate cut timings, AI slightly coming off the boil with its enthusiasm and the— I saw an interesting stat and this will be my last one and we can move on. I don't want to put in too much markets, but if I remember rightly, we've had something like 160 consecutive trading days around that figure where we've remained above the 50-day moving average in the S&P 500. This week we fell below it for the first time, and that 160, yeah, it was the longest streak we've had in 75 years. It's within the top 10, I think. So we've had this fairly uniform, fairly like, uh, calm move higher, although it doesn't feel like that intraday, but in a top-level bird's-eye view it has done. And so yeah, we're starting to see a few Few concerns, few cracks appear now, um, which is interesting. We're in this sweet spot. The economy's firing, stock is— it's such a perverse world of markets, isn't it? Economy's doing fantastic, market starts to fall.

Yeah, absolutely. I mean, maybe we should— yeah, maybe I should get out of equities and get myself into some debt, right? It's a segue to the next.

It works, Stephen. Our plan works.

Alright, let's talk about debt capital markets. Okay. So again, in the investment banking division within a bank, you will have M&A, which we talk about a lot, mergers and acquisitions. And then you will have a range of different financing products. So you've got equity capital markets, equity issuance, IPOs, et cetera. Talk about that a lot. Uh, you have debt capital markets, which we're going to talk about today, and you have leverage finance and corporate financing as well. And we're going to go do a little bit of a primer on the difference between those things. And debt capital markets, again, doesn't get as much love maybe on the podcast as the other areas. And we'll try and explain why. So debt capital markets, what is it? It is the kind of the origination within an IBD context. It is the origination of investment-grade bonds taken out, issued by sovereigns. So by countries and by investment-grade companies, it's bond issuance. And there is a heck of a lot of investment-grade bond issuance out there. And it absolutely, as you know fully, and it absolutely dwarfs from an issuance and market size perspective, it absolutely dwarfs new equity issuance, IPOs, things like that. It's just a much bigger market. Again, very simplistically, if you think about it from one perspective, sovereigns don't issue equity. So you've got this whole sovereign bond market that banks get involved with new issuances every single day from countries around the world. And the debt capital markets team within the IBD division will be responsible for all of that. So it'll be responsible for Apple issuing a bond or T-Mobile issuing an investment-grade bond. And then the next day, different part of the desk might be responsible for the UK government issuing a new 30-year bond or the US government or whatever it might be. And that is why if you look at the, I think the the league tables, the FT does some brilliant league tables on, on all of this kind of stuff. Last year in 2023, there were $8.4 trillion worth of issuance in the bond markets, in the investment-grade bond markets, very importantly. And we'll talk about the difference in a second. Uh, with JP Morgan topping the issuance list, $361 billion, but they only picked up I think the average fee was about 0.4%. So massive, massive issuance market, and there was only $31 billion of fees. Compare that to the equity capital markets issuance in 2023 of just $534 billion. So a lot smaller than $8.4 trillion. They gathered equity capital markets teams gathered $14 billion of fees. Average about 2.5% fees on issuance. So let's think about this and think about maybe why we don't talk about DCM as much. It's a lot higher volume. It becomes relatively transactional. It's not quite as event-like as an IPO or a massive new convertible issuance. Therefore, the fees are smaller. And therefore, if you're looking at the headlines on Bloomberg or on the FT, unless it's something pretty blockbuster, unless it's something beyond the normal, you're not going to get a headline that says, again, T-Mobile issue issues, you know, 10-year bond at X price and Y coupon, et cetera. It just doesn't happen.

How hard is it to win business? Because I'd imagine that if I had a client and my client is Saudi Arabia, Saudi Arabia, for example, any, pick any country, surely then they are raising, well, Saudi's a bad example because they're probably relatively new to raising debt, but say like any other European country, they're raising debt regularly. And so wouldn't I just use my regular provider of that to help run that process? I.e., Citi, for example, whereas is it, is it a more competitive tendering process on the ECM side? And so therefore, Is that a distinct difference?

Yeah, it's a good question. And because of the volume of origination that comes through, there is definitely a more simplistic and faster process, right? You know, if I'm building up to an IPO, if I'm building up to doing an acquisition, this could be 3 or 4 years in the making. If this is my, you know, my nth issuance of the last 18 months, then I do need to dial around for sure. And I do need to look again, the issuance process for bond is like a baby version of an IPO in the sense that you might, especially if it's a corporate that's just been re-rated, maybe it's gone from high yield into investment grade, then you have to go on a roadshow and show a whole new tranche of investors. All right, this is what we do and this is why our bonds should be priced like this. And this is the structure and this is who we are. So yeah, you do need to have some trusted debt capital markets bankers, but once you've got that first issue, again, Apple, the market knows Apple. It's not going to be, you probably call up 3 different, call up 3 different banks, make sure that you are getting a little bit of tension between who can offer the lowest fee. And then just, you know, click and go and getting out on the market. There's, you, Apple's not going to have to do like a mega roadshow. For a small AAA-rated bond.

So, so for a, from a career lifestyle, let's call it, because I remember one of the alumni from Amplify was working in DCM and it just seemed like he was forever on the road. Is that, is that the life of a DCM person?

Or I tell you what, DCM sits in such an interesting space because they, they almost Well, they, I mean, they almost physically sit in between the trading floor and the investment banking division because obviously the trading floor is full of bond traders. And again, there are Chinese walls and material non-public information, but actually it's so close to the bond trading team on a trading floor that they're almost, you know, and they're pricing bonds and they're having, you know, and they're looking at lots of different elements, structural elements within the bond market and things like that. So as someone who's looking to get into investment banking, ECM definitely has slightly more of a kind of trading flavor in terms of the way that, you know, you're not doing financial models all day. You're doing a lot of credit ratings, but you're doing, you know, you're doing a lot of bond pricing and you're doing a lot of, yeah, thinking about call and put options, yield to maturities, all of this kind of stuff. But then obviously you're sitting within the investment bank. I would say that your days, and you, and I guess you also straddle the leverage finance space, which is basically the high yield bond version of debt capital markets. And you also straddle the corporate syndicated debt issuance space as well. You can all be working together. I'd say it fits in terms of hours and in terms of intensity. If it's somewhere between normal lending, corporate lending at a bank, it's kind of like your good solid 9, 10-hour days. And then your M&A, which is up until 2, 3 AM in the morning. It's probably somewhere in between that. It's still really intense and the pay's pretty similar across analyst and associate level. But again, it's definitely more flow. You're always on a number of deals. You're going to close a lot more transactions. Flow is a lot, you know, there's a lot faster kind of feedback loops, but you don't get that kind of, it's the front of City Wire, you know, City AM headlines. I worked on that deal. That doesn't come along quite as often.

So, so saying that then, is it a bit different in that atmosphere? Because I imagine that then running IPOs and having like, you know, the, the one of the year and putting your name to like Reddit or whatever it might be, there must be a lot of ego in the ECM room. But DCM, is it, would it be right to say it's a little bit different or is it, am I reading too much into it?

Yeah. I, you know, again, this is the, I mean, it's extremely anecdotally. I always thought that the DCM guys, yeah, again, were probably slightly more numbers oriented, knew a little bit more about the fundamentals of trading and the fundamentals of yield curves, as I said, and things like that, maybe relative to the bankers on the other side of the room, you know. I was more focused on looking at financial modeling and looking at pricing and looking at merger models. Probably better at Excel. But yeah, I would probably say that the DCM teams think of themselves as the kind of engine room, the, you know, the engine room of revenue generation. You know, they're not about stealing the limelight, but they are about getting a lot of stuff done. And if we're talking volumes, then DCF, DCM teams absolutely smash it relative to for ECM teams.

Could you just summarize for me then, what traits are we talking about that would make someone suitable for ECM, do you think?

Yeah, it's a good question. I think not massively dissimilar to the traits that you would be expecting across M&A and across equity capital markets. I think there is a little, as I said, a little bit more from a kind of financial market side. You'd want to be able to showcase and be interested More in the market side, you can put your head— if you're working on a deal in M&A, you can put your head in the sand and just work on that one company for quite a long period of time. There's a slightly more macro element to getting a bond issuance away and to being in DCM. Again, as with all IBD positions, it's relationship-driven. You're still going to have to generate relationships with the companies and the sovereigns that you're working with. And you want to be the first person that they call. So when you get into that position of seniority, as with all of these things, you move away from being, can I crunch a bunch of numbers to what's my, how trusted am I as a high quality professional that you want to be on the end of a phone call with. So yeah, not dissimilar to the rest of the, uh, of, of IBD, but again, maybe a nice angle because it's not the thing in the headlines. You know, it's not the thing that we're all talking about. And if you can get yourself, get yourself interested in this kind of stuff and then be able to talk about it in a meaningful manner, you hope that when you're getting interviewed for your internship or your graduate, you get sat across the table from a DCM banker as opposed to an M&A banker. And maybe that's it, off to the races.

Is there any, my final one on kind of on the careers aspect is that With M&A, like, we've gone through quite a— feels like quite a sea change of momentum where we were cut— big banks were cutting jobs. Now looks like things are picking back up again. Do you get a bit more stability in that job security in that department, or is it similar?

Uh, so yes, to the extent that the majority— the way that— well, certainly the way that governments work, and to an extent the way that companies work, is You have to refinance your debt. So you have to do a new issuance to replace an old issuance. In some cases you pay down debt and that's great. But as we can see in many governments, the debt just keeps coming and keeps piling up. So there will, in the way that you don't keep having to make acquisitions, you will keep having to, again, you can take a look at, and I might put this in the show notes, you can have a look at I was just taking a look at T-Mobile's debt, outstanding notes and credit facility out to 2062. They probably got 30 or 40 bonds, maybe 20 or 30 bonds maturing from 2024 through to 2062. So if I'm a DCM banker and I'm covering T-Mobile, I'm like, okay, all right, we need to talk about their 2027, you know, bond maturity. That's a $4 billion bond. We need to start thinking about getting a new issuance in. Maybe we'll take the bond off the table and put in another debt facility, a kind of term loan facility. That's the kind of flow of DCM. And then obviously you do have the cyclicality of, you know, at the moment issuances in DCM are going crazy as everyone's trying to, well, everyone's issuing sovereigns, big investment grade companies issuing very long dated long-dated bonds. I think European debt issuance was at its high— investment-grade debt issuance was at its highest level in about 10 years at the beginning of this year. So yeah, it is quite cyclical, but you've definitely got that flow.

Would you split the DCM department into almost like business client management and retention and then business development going after new clients? Or would that be judged by seniority within team? And so within a geographic region, you have your MDs out trying to close new business and then all the backend work, all the grunt is done by other staff.

Yeah, I think, I think as you get more senior, you will get the opportunity to do new business development and new first-time origination. So in the same way as the IPO is the most exciting part for an equity capital markets, The most exciting part for debt capital markets is, hey, here's a company that's never put a bond out in the market. We need to go out and get it ready to get a credit rating. So you need to get rated by S&P, Moody's, and Fitch, or 2 out of 3 of those at the very minimum. So we've got to get them ready for that. We need to make sure that we're talking to these organizations. Then we need to go on the roadshow. Then we need, you know, so that's the thing that gets quite fun. And that's probably the domain of the more senior bankers. It might also be split by sector as well. Cool.

Makes sense. Well, you've sold it to me. I've got the same salary you said, but I've got less jobs, less risk with my job.

So same salary, same salary at an analyst or associate level. So, and I don't know, maybe if you want to, if you want to hit my glass ceiling, exactly. Just stick as an associate, lifelong associate.

Well, how does it change then? What, so when you start working on the mega, so let's say if SpaceX does an IPO.

Yeah, exactly. I mean, so if you are the lead book, if you are the managing director or whatever it is, who is the managing director for the lead book running bank for the SpaceX IPO. You know, get down to the beach. Yeah. You're going to be, you're going to be all right for a few years. Right. You know, so you can, I think it's the lumpy nature and it's the exciting bit. If you can be a, if you can be a rainmaker in M&A or ECM, I think, you know, the upside is probably quite a lot larger, but again, job security, et cetera. So yeah, I mean, look, we're going to check in next week, audience, to see whether Ant has indeed joined or whether he's going to try and chase.

I'm going to go, I'm going to go completely risk-off and I'm going to go and work in the regulation supervision at the Bank of England. They do a good lunch.

Well, good luck with that.

All right, well, look, just to recap, this episode was entirely based on questions from you, the community, so, um, I can't commit to saying we'll do that every week, but we certainly will do if we get quality questions. So on Spotify, I know you can leave a comment. So if there is something you'd like us to cover, whatever that might be, yeah, then just let us know. We'd love to. All right. Thanks, Stephen.

Thank you very much, Ant.