It’s official. I’m an investment banker in Deutsche Bank’s Industrials Group. I’m not entirely certain what “industrials” are, but I know this: Andrew Carnegie has a hall named after him, Henry Ford has cars named after him, Cornelius Vanderbilt has a university named after him, and John D. Rockefeller has a center and a record label named after him. Historically, industrialists have a helluva track record. I wonder what they’ll name after me.
“Let’s go,” says a fellow new associate as he hustles down the hall. I grab a notebook and a black pen, sling on my suit jacket, cinch up my tie, and follow him into the main conference room on the 44th floor.
Lining the perimeter of the packed rectangular room are the analysts and associates, including all the new joiners, clearly identified given we’re all wearing full suit and tie. Seated at the large table are senior bankers, a variety of individuals both thin and large, bald and well coiffed, laughing and stern, mostly males and a few females.
First-Time Caller
“Thanks, everyone, for joining,” says one of the most senior-looking bankers; he sits at the head of the table. “A lot of new faces. We’ll do introductions at the end, but why don’t we jump in and get started?”
A series of beeps chimes from the spaceship-looking speakerphone at the center of the table. “Can you hear us-us-us-us? Chicago’s on-on-on-on,” says a disembodied voice. It echoes, and the room fills with laughter—most forced, some genuine.
“Anyone know the moderator code?” says a senior banker as he disconnects the line and redials. Someone reels off a six-digit number. He dials again.
“Chicago, you with us?”
“Chicago is on,” someone says over the speakerphone, this time with no echo.
“You got Boston on the line,” says another voice. “London’s on,” says a British voice.
“Great—couple housekeeping items to start,” resumes the banker at the table. “As most of you know, last week we had our Industrials-equity conference. A full slate of corporates were there across all our verticals. Got a lot of compliments—our building-products team did an event at Wrigley Rooftops one night, beautiful night, well attended, don’t think the Cubs won, but that’s neither here nor there. All in all, great conference. Make sure we extend thank-yous to clients. Great time to follow up.” He looks around the room and nods at a few of the fellow seniors. “Might as well jump in. E.C.M., want to kick things off?”
The room fills with laughter—most forced, some genuine.
A younger-looking M.D. with a slick-back straightens in his chair. “Sure. Look, the theme continues to be resiliency when we look at how the market’s traded back half of this quarter. Despite a lot of the ancillary noise, the major benchmarks re-established all-time highs. Investors continue to be receptive to the asset class. One of the interesting trends—a blinking light on everyone’s screens—is the crowded-out technology trade. Tech stocks are up about eighteen, eighteen and a half percent this year. We saw them get hit last week, and a pretty strong rotation into financials, energy, and materials names. This should provide some tailwinds that’ll help us in the industrials space.”
My right wrist cramps as I flip the page in my notebook. The girl to my right, a new analyst, appears to have written everything down in perfect print using a purple pen. The girl to my left, a senior analyst, stands with arms folded, no notebook on her person.
“Relatively light week in new-issuance front—11 deals for about five billion. Couple of these bigger names are over their skis. But we do expect more names to issue through the summer, and we’re already up about 40 percent on a volume basis and 60 percent on a proceeds-raised basis. One big theme we’ve seen in the market is early lockup releases—”
Early lockup releases?, I write in my notebook.
“A lot of guys have been getting waived from lockups early. We want to be cognizant of who controls the lockup. Sometimes it’s one party, sometimes it’s two or three, so that’s a conversation we should be having, and how we strategically approach that. Also the equity-linked theme and being creative around that—”
Equity-linked, I write with a heavy underline.
“We’ve had some great discussions around this with sponsors who historically would do your bread-and-butter selldowns over time but are now looking to hedge their positions with collars, selling call options on the position to help provide some near-term monetization if they still see some longer run in the stock before they want to sell. To that point, we did a really nice trade last week for Tesla—$145 million convert for equity exchange. So any conversations around the capital structure, bring us in and let’s see what creative solutions we can provide.”
Convert to, I write, but I forget the rest of it. I peer again to my right. I’m going to need to photocopy this girl’s notes. I don’t know how she does it.
The speaker leans back, seemingly finished.
“Should we flip to D.C.M.?” says the banker at the head of the table. “The story remains the same: What’s the Fed going to do with rates? Indications are dovish for the near term.”
I know this one, I think. Dovish—doves fly south for the winter, so dovish is south, that’s down, that means lower interest rates. Wait. Do doves fly together? Ducks definitely fly together. Quack, quack, quack, Mr. Ducksworth. I abandon thinking and return to note-taking.
Letter Quality
My notes on the debt-capital-markets spiel:
- Spreads at pre–financial crisis levels
- Eight percent return, five percent vol, depending on which metric used
- Toll trade priced 15 B.P.S. wide of talk
- Fixed to floating/rising rates
- Industry headwind could be tailwind for company
- Lotta left leads
- Headline leverage seven times–C.R.M. receptive if good cash-flow characteristics
- Legal issue
- Continue pushing big clients, but nichey transactions to drive league tables
I shake my right hand and look up from my notes. No senior analyst or associate looks halfway engaged. They look numb.
“So I know a lot of this work is getting churned out from those on the perimeter of the room, so much appreciated.” I scan the junior bankers he’s referencing. None smile or in any way acknowledge him. “Also want to flag, we’ll be holding our 25th annual leveraged-finance conference in Scottsdale. Great event. We’re going to circulate a list of accounts who’ve accepted and those we need to follow up with. Need to get the logistics figured out so accommodations are settled. Great excuse to get on the phone with some of our accounts. And, oh, by the way, got some pretty good guest speakers—Michael Milken, Sallie Krawcheck, George W. Bush. So that’s a marketing spin we should be sending to clients.” He taps the desk then leans back in his chair.
“Excellent, thanks. Investment grade? Who’s here from I.G.?” says the moderator. A small woman with a bob raises her hand. “Lillian, great. Take it away,” he says.
Echo themes … two-year tights … triple B’s … tranche du jour … tail risk … dollar/euro cross-currency swap … from a market perspective … LIBOR-based borrowers … from an issuer perspective … third rate hike priced in … 11-year-maturity-duration paper … two spot one five, read my notes until I finally give in.
I listen to Lillian, who uses zero intonation as she informs us about the current state of the investment-grade markets, which I semi-confidently conclude as being “pretty good,” though I keep that assessment in the confines of my own head.
FX goes next. Then interest rates. Then C.B.C. Who the fuck are all these people?
Dovish—doves fly south for the winter, that’s down, that means lower interest rates. Wait. Do doves fly together?
“Thanks, all—our Industrials franchise continues to grow, and that’s a testament to everyone in this room, so I want to thank you guys and gals for the hard work and for the work to come,” says the senior guy. “I think we’re through—”
“Um,” says an African-American woman, raising her hand.
“Compliance, right. Apologies. Take it away.”
The speakerphone beeps once, then again, then a third time—people dropping from the line.
“A couple announcements from Compliance. The first pertains mainly to new joiners, but everyone should listen,” she says, as senior bankers all slide their BlackBerrys out of their pockets and put on their glasses. She says something about FINRA questionnaires, conflict-clearing, log-in credentials, prison time, and some other stuff, but no one seems to pay attention. “I trust you all have been following the Litvak case,” she says, referring to the former M.B.S. trader at Jefferies who was embroiled in a securities-fraud scheme. “Each week, there’s a new story about someone getting Litvak’d. His name has become a verb. You don’t want that.” She tries to make eye contact around the room but fails to realize the real reason no one is paying attention is that Jesse Litvak and all these guys getting indicted work in sales and trading, not corporate finance. (Litvak was eventually exonerated.)
“Another friendly reminder that you must accompany the client if providing event tickets that exceed $100. Absolutely no exceptions on this,” says the compliance woman as she scans the room, though she’s unable to meet the eyes of any of the apparent culprits. “Also, I want to remind everyone that political contributions must be pre-cleared.”
A senior banker perks up. “So for everyone planning on going to the Bernie Sanders rally this Saturday … ” The room erupts in laughter, first from the senior bankers, followed shortly thereafter by some juniors. The compliance officer looks annoyed and leaves the room.
Meet and Weep
Once the political side conversations subside, each new joiner introduces himself or herself—name, university, and hometown: Bill Keenan, Columbia Business School, New York. I don’t fuck up. One new analyst does, fumbling between a slew of hometowns—born here, grew up there until age three, then moved to who-gives-a-hoot. No one cares.
“Go, Blue Devils!” says a female senior banker after a new analyst announces her undergrad as Duke.
The meeting adjourns.
How much of that was I supposed to understand? I want to ask one of my fellow new joiners, but after my interactions with them during training in London, I fear they’ll smell blood.
While I’m familiar with the obstacles to learning a foreign language, what happened in that conference room was scarier, since the words were in English. My Excel proficiency is already suspect. And I only opened PowerPoint once during business school, and that was by mistake—the icon was right next to my Internet Explorer icon.
I drop my notebook at my desk and dash to the bathroom, where a junior banker with freshly wet, matted-down hair and a side part is brushing his teeth. “Client meeting,” he says mid-brush. I walk into an empty stall as he starts to floss. I want to cry. Especially when my senses are exposed to the massacre occurring in the stall next to me.
Bill Keenan is Chief Operating Officer for Air Mail
