Why I should be paid more

My employer suffered a 19% share price slump in the three weeks I was on leave.

Fancy that

I've revamped my links using Google's/Blogger's new features.  I think it's kind of cool - also makes it easier to fish for blogging ideas.  Except I'd really prefer to have "Business only" Reuters newsfeeds.  If you know of any other blogs, news sites, and websites worth looking at, let me know!

Bankers vs Management Consultants

Another article to fan the flames of war between Bankers and Management Consultants (needs subscription to McKinsey Quarterly).  According to the article:

"A shortage of strong internal candidates for critical positions will force European banks to overhaul their talent-management efforts in order to stay competitive and ensure strong growth."

Bankers will point out that this article (a) is stating the bleeding obvious, and (b) simply contributes to the already-low employee morale by vaguely referring to some of them as 'second-tier talent'.

Consultants will point out that (a) hey, they're just telling everyone what bank executives told them, and (b) they added value by stating the bleeding obvious in prettier pictures.

LINK DUMP!!

CBA looking to acquire Australian arm of ABN AMRO.  From what I've seen for some time now, CBA has been a relatively distant thought in the corporate finance arena (with possible exceptions in project finance and equity sales), while competitors NAB, ANZ and Westpac have been relatively known quantities due to broader and more aggressive offerings.  This, along with the Westpac/St George merger (which is still unfinished, by the way) will tilt the game somewhat.

A new race for the North Pole is born.  Polar bears ponder shaving and migrating to more tropical regions.

Nick Moore at MQG must have put on a great song-and-dance number to get the 12% one-day bump up yesterday.  Disclosure 1: Rockett Fuel has MQG shares.

Via Dealbreaker: amusing job ad.  Even more amusing are the commenters all trying to out-geek and out-quant each other over a simple "heads or tails" exercise, while simultaneously failing in basic counting when trying to respond to each other. 

Will be back in Sydney by this time next week... 

London!!

In the rush leading up to the London trip, I haven't had a chance to write Part Two of the Conference.  In any case I will have to revert back to my notes (conveniently still on my work desk), so that will have to wait a little longer.

I had lunch with a contact based in London, who confirmed what I've only read about to date; essentially, the London market is stuffed.  Deal volumes are down, only mild improvements in debt overhang, with recession prospects and a depreciating sterling likely to magnify the problems.  While the investment banking employment market is not entirely dead, you do need to look harder for the right opportunities.  It was certainly a very informative chat over a couple of beers (plus some free advice on the London lifestyle), and certainly someone worth staying in touch with.

An interesting development in London (and one more than likely to be repeated in Australia) is the increased use of mezzanine debt and equity/quasi-equity to take up the slack from senior debt.  While more expensive, the non-cash nature of the costs means that it improves the cash conservation of a deal, improving debt serviceability to make the deal palatable for senior and subordinated debt investors.  

We are seeing a slow but steady move towards mezz debt in Australia; in fact this was one of the key topics discussed at the conference.  How well it gets accepted I think will depend on arriving at terms that maintain the right risk-return metrics as well as the senior ranking against equity.  Will mezz holders get pro rata benefit from dividend recaps?  Are equity kickers the way to go?

Overshadowing all this (and may possibly render it all moot) is that the credit crisis has not fully unravelled, and it is now widely accepted that it is impacting hugely on the economic fundamentals.  Combined with higher commodity prices feeding into higher inflation expectations, the questions will need to move from "how long will the credit crisis last" to "how long will the slower growth in the developed economies last".  One imagines that economic fundamentals will take far longer to turn around than declines in the debt or equity markets, but one that feeds back to the prospects of those tradeable securities.

Conference, Day One

I got back from the team offsite conference just a few hours ago. It was interesting finally getting to meet the rest of the team in Melbourne and New Zealand, as well as a lot of other people from other units (Credit, Syndications etc) who I have spoken to on the phone regularly but haven't properly met face-to-face.

The two-day conference went well enough. The first day was essentially the "team building" day and the second was the "strategy" day. Some observations which I thought were relevant or amusing:

Double Agent
With the right type of information and appealing incentives, mistrust and accusations skyrocket at the slightest hint of unexpected behaviour. The "right type of information", of course, being a lie.

Weak Links
Team-building activities tend to have the ironic effect of revealing that, as much as we like to think that we work best as coordinated teams, we can actually derive just as much value by being a loose collaboration of individual performers.

Too many cooks
Having two Global Heads, plus a known extrovert, in your corporate games team is a surefire way to see a leadership struggle unfold.

Does this mean anything Part I
I was in the same team as the Global Kahuna of Leveraged Finance, and the Global Head of Syndications. In the first game we played, they both participated, and we lost. In the second game we played, we were running behind halfway through the game; but then both Global Heads left during the game to take phone calls. The team (sans Heads) managed to catch up and almost steal the second game.

Does this mean anything Part II
There were six games played all up. We won two games: one involved throwing bags at numbers, the other involved finding and touching scattered numbered cards in ascending order. In classic Rockett Fuel geekdom-inspired dry humour, I went up to the Global Kahuna after winning the last game and deadpanned: "So we can win games that involve numbers." It was the first time he laughed during the games.

I overheard him repeating my lame joke at the bar later that night.

Unsure if this is a compliment or a hex
Global Kahuna talking to Director, No Credit: "There's two really hard workers in our team; Rockett Fuel is one of them."

On that note, I will keep my mobile turned off during my London holidays.

Serendipity?
My new line manager (after my previous one left to join the Dark Side), on me securing a seat at the geek table that just happened to have all the bigwigs in it: "Nice work getting into the head table."

Not that I planned it; when I walked into the dining room, I was just thinking "crap, I forgot my glasses. Now I have to sit at the front".

The relatively more informative Day Two commentary will be posted later.

Frustration

One of the frustrating aspects of my job is that, because we are the key point for the transaction, all the peripherals that were previously attached or have since been attached to our transaction becomes MY problem. Disregard the fact that the silly bilateral facility out to a tiny JV in south Kazhakstan is 0.000001% the size of the leveraged transaction I continue to manage (God knows why when we can easily be free of the problem for 70c on the dollar). The seemingly harmless note that it is unsecured is enough to send the Credit Chain Gang into a frenzy, and demand reams of useless information simply so they can "assess" whether it's better to demand refinance of the pimple facility now (assuring no payment and the ire of the borrower), or give them 30 days to do it. Geez guys do you really need the 5-year forecast to make a decision?

In other news, I continue to lose money on all the stocks that I have not yet been banned from trading. Which unfortunately consists almost entirely of financial stocks, because our silly "Four Pillars" policy and the fact that no one wants to touch them with a barge pole virtually guarantees no deals... for now.

Career-wise, we have had some pretty heavy losses - a very experienced director has switched to the Dark Side (PE), and another manager has gone to the Land of the Long Lunch (Syndications). Interesting since finance is supposed to be seeing a slowdown in hiring. There is now an unofficial ranking table on the biggest flight risks in the office, which would probably work better if people weren't such rampant liars about the interviews they are going to.

For what it was worth, I told my new director exactly what had been discussed with my old one, where I thought I was heading, by when, and my key development points before the deadline. It is an unfortunate irony that, while every team would love to have a stable core, in reality it creates serious problems of its own. Excluding our graduate/model monkey, everyone on the team has been there around 15-18 months or more. Naturally, this bunch of overachievers will all be angling for promotions by end of the year. In a high-octane, tight-knit group, promoting one person over another will inevitably cause serious disruption to the team's chemistry. It makes for a very interesting analysis of the Flight Risk Table rankings. It would be funny, I think, to find out that someone believes my eerily normal behaviour, coupled by steadily increasing number of coffees per week, translates to multiple interviews each week. (My coffee meetings are all legitimate business, by the way.) Overanalysis is fun to watch.

I will be off to London in a couple of weeks for some R&R. Hoping to catch up with old friends, I'm sure some of them will have plenty of time to spare, given the wrath of Bernstein's Gods is on a rampage over there. I will of course endeavour to get a feel for the situation there (as much as I can get a feel for in between pints of beer, anyway), and write about it here. See how we go!

Death and reanimation

RIP Bear Stearns. One day, when the "behind the scenes" book about your demise is written, it will sit proudly next to my copy of "When Genius Failed". Delicious irony.

Anyway, Rockett Fuel is alive and relatively well, and will AGAIN try to blog more regularly. I just had to mark the occasion.