2015 hasn't been a happy time for high yield bond origination professionals in Europe, the Middle East and Africa. Year-to-date, information provider Dealogic says the value of new bonds issued is down 39% on 2014. Come the end of the year, bonuses maybe reduced substantially and jobs done away with.
Kathryn Pride, a director at recruitment firm Dartmouth Partners, says it's too early to call bonus numbers of this year, but that high yield and leveraged finance teams in investment banks are being depleted as staff move to hedge funds and that they're not being replaced. "High yield origination teams are pretty small anyway, but you have some teams that would have had three juniors previously and that now have none," she says.
Listed in order of importance, the top ten banks for high yield origination in EMEA this year are J.P. Morgan. Deutsche, Goldman Sachs, Barclays, Credit Suisse, BNP Paribas, Citi, HSBC, and SocGen,
"On the whole people in high yield debt capital markets jobs will be paid the same as people in M&A and other areas of the investment banking division," says Richard Hoar at recruitment firm Goodman Masson. However, other recruiters say pay at the junior end varies greatly depending upon the kind of banking you're working for.
A third year associate with around six years' experience working in high yield origination for a large US investment bank in London can earn up to £260k ($398k), for example. At a smaller French investment bank, that same person is likely to be on half that.
Pay is less differentiated between banks at analyst level. Pride says large US investment banks pay their high yield analysts approximately the same amounts they pay their M&A analysts - £77k in year one, £93k in year two, and £109k in year three. At French investment banks, high yield analyst are on up to £100k in year two and up to £110k in year three.
High yield analysts who quit for hedge funds typically take a pay cut to begin with, say recruiters. However, this is compensated for by the bonuses. "Base salaries for juniors in hedge funds are rarely more than £55k," says one recruiter. "At smaller less aggressive funds bonuses might be 20% to 30% of that, but at larger funds they can be 80% or more."