by Brian DeChesare Comments (96)

Debt Capital Markets (DCM) 101: How You Break In, What You Do, and What You Do Next

3D rendering of abstract stock market symbols and graphs

This one has been a long time coming, but it’s finally here: the debt capital markets article you’ve been waiting for since this site began.

In this interview with a reader who works in DCM in Canada, you’ll learn:

  • How recruiting differs in DCM.
  • What an average day in a DCM group is like.
  • How DCM is different from Leveraged Finance, and pros and cons for each one.
  • Differences between DCM groups in the US vs. Canada.
  • The culture, pay, hours, and exit opps in DCM.

This one’s a monster and might just be the most in-depth interview ever featured here, so let’s get started.

How to Break In

Q: Let’s get started with your background and how you broke into the industry – any ninja tactics to share?

A: I graduated from a Canadian university that was among the top tier for IB recruiting in Canada.  Ironically, my school was one of the few that had active recruitment from bulge bracket banks in New York but was maybe only 3rd or 4th in terms of placement in Canada.

I broke in without a summer internship because I had a unique background – I had traveled back and forth between another country for much of my life – and my work experience stood out. Plus, the market was better back then and it was easier to get in with less work experience.

I interviewed for both investment banking groups and DCM, and ended up with a DCM offer after going through final rounds and speaking with several different groups.

Q: So it sounds like you were placed in DCM rather than selecting it upfront?

A: Back when I was interviewing, sometimes it was clear which group you were interviewing with in the first round, but it was difficult to tell which one you’d end up interviewing for in the final round.

That has changed over time; today they would make you apply for the particular group (IBD/ECM/DCM/Corporate Banking) ahead of round 1.

Q: Right, so how was the recruiting process itself different for Debt Capital Markets? I’m assuming that resumes were similar but that interviews were slightly different?

A: Pretty much – from having submitted my resume and from screening resumes myself now, I can tell you that there are almost no differences there.

Interviews, however, can be significantly different and you may get a lot of sales & trading-type questions.

That happens because DCM is a hybrid group, and so you may get interviewers from the Fixed Income trading side as well – I had interviewers from securitization (back when that was big), money-markets, and derivatives trading, in addition to investment bankers.

So I got questions about my general understanding of topics like how to hedge interest rates, FX rates, and so on – to be safe, you should learn the basics of those and other common Fixed Income products.

Ideally, you can find out from HR which area each interviewer works in – if you’re speaking with traders, make sure you know something about their trading products.

Q: That sounds pretty random – I don’t think people get those types of questions in ECM interviews.

A: Yeah, it’s because DCM is frequently a joint-report between investment banking and the trading floor at many firms – we’re the “eyes on the trading floor” for bankers and the first point of contact for Fixed Income trading.

Bankers tend to understand equity much better than debt, and on a technical level there is not as much to know  – so you won’t get such questions as much in ECM interviews.

What You Do

Q: OK, so you made it past these random interview questions and now you’re working in DCM. What’s your average day like?

A: Usually I’m at the desk by 7 AM.

Between 7 AM and 9 AM, most of the team meetings occur and DCM sits in with the sales force and traders to learn what’s going on in the market that day.

Then, those 2 groups leave and syndication and DCM stay behind to discuss possible and pending deals – this is inside information and so the traders and sales force must leave at this point. At some banks, a compliance officer monitors this meeting to make sure nothing inappropriate gets out.

By 8, we’re finished with the meetings and we spend most of the next hour catching up on the news, seeing what happened overnight, and monitoring what traders in other offices are doing.

We’re also watching for economic data and we might speak with clients around this time, especially if they’re launching a deal that day.

Deals start launching when the market opens at 9:30 AM, so that’s when it gets really busy if we’re leading any deals.

Q: Right, so let me stop you right there – before we jump into the rest of the day, what types of deals do you do in DCM?

A: Most of our work is issuing investment-grade debt for clients. Debt is split into several different categories, from lower-risk, lower-interest rate “investment-grade” debt, to higher-risk, higher-interest rate “high-yield debt.”

They appeal to different types of investors and can serve different purposes. Investment-grade debt comprises of the majority of the market and common uses of proceeds include funding business operations and working capital, while high-yield debt is more common for LBOs and dividend recaps and usually involves riskier companies.

So a client might come to us and say, “We want to raise financing to do X – what type of debt do you recommend, what terms (interest rate, term to maturity, covenants, etc.) could we get, and will investors buy it?”

Then we would help them issue the debt and get the best terms possible, and the sales force would sell it to investors.

Q: Right, that should clear things up for anyone wondering what DCM does. So what’s your average day like after the market opens at 9:30 AM?

A: A lot of time is spent monitoring the market, running back and forth between trading desks, and helping syndication allocate orders between different investors and build the books.

There’s also some administrative work from lawyers working on deals, and we have to help with drafting term sheets and sales force memos.

For example, the sales force might need to get up-to-speed on a certain debt issuance so they can pitch it to investors, so we would fill them in and get them all the relevant details.

Sometimes investors also come to us, via the sales force, and ask more about the borrower because they haven’t had time to do due diligence themselves.

Analysts usually don’t field those calls, but as an Associate you might start doing that if the desk is empty or everyone else is busy.

So we might get tasked with pulling credit rating reports for clients and interfacing with the lawyers and sales force on a deal. If we’re not launching any deals that day, it’s much quieter.

Q: So what happens on those “quiet days?”

A: On those days, we’re mostly working on market update presentations and sending updated slides to IB and ECM.

ECM often pulls us in to help with preferred stock and convertible debt deals, because those are both securities with debt-like components.

Another big time consumer is constructing case studies of recent debt transactions, updating credentials and conducting post-deal analysis for your clients.

Given the speed at which seasoned borrowers can access the market (2-5 business days if their documentation is up to date), momentum is key and the minute you’re done leading a transaction for one company, you have to hop on the phone and speak to its sector peers.

It’s not uncommon to see a bank rattle off several lead mandates in a sector simply because it led the most recent transaction for a company in that sector.

In Canada, dividends and interest are taxed completely differently, so we also spend time with ECM calculating and comparing the “all-in yield” to investors or the “all-in-cost” to borrowers after taxes for bonds, convertibles and preferred shares.

Especially in this environment, clients and investment bankers often take a keen interest listening to the various options for financing from their capital markets bankers.

Lastly, on a weekly basis, we’ll send out indicative pricing to clients. Over the week, we’ll talk with the traders and syndication to see what big trade flows go through in a client’s bonds and use those trade points as information.

We’ll also monitor where the bonds are being quoted at and in discussion with syndication, each client will get proposed pricing for a variety of terms to maturity each week.

It’s important for a DCM and syndication team to keep tabs on what the market sentiment is on a particular client, not just the trading comparables.

Putting down what you think the credit spread should be for a potential issue can be more art than science – but it’s a crucial art.

Show a credit spread that is too wide and the client will think you’re nuts; show a credit spread that’s too tight and you don’t look credible – and you’ll look even worse if the client asks you to help execute a deal at that spread, only to realize there’s no market demand at that expensive level.

Note: A “tighter” credit spread means that it’s a smaller spread over the government benchmark, which means a lower yield for bond investors – which in turn means a higher bond price, and vice versa.

Also note that clients and investment bankers often use these bond yields for their calculations of the company’s WACC, so you definitely want to give it some thought every week.

Some clients will also want to know how that cost of debt compares relative to issuing in the US or Europe, which means you’ll have to work with the derivatives desk to swap the pricing to the respective currency.

Q: That sounds like a different type of modeling, which I want to circle back to in a bit. But before we go there, I want to address the most common question I get on DCM: how it’s different from Leveraged Finance.

How would you summarize it?

A: The main difference is that Leveraged Finance works with mostly sub-investment-grade debt (i.e. high-yield debt), whereas Debt Capital Markets handles mostly investment-grade debt.

In Canada, the Leveraged Finance market is not as large and developed as it is in the US, so DCM often handles both types of debt here – most DCM groups have 1 or 2 high-yield debt specialists.

The modeling work can also be slightly different since Leveraged Finance focuses more on acquisition and LBO scenarios, whereas in DCM we do more “debt for everyday business” analysis which often doesn’t require any modeling.

And then the exit opportunities are also different, but we’ll get into that later.

Q: Right, so let’s say you’re working on a debt deal. What would the DCM analyst do and what would the industry group analyst do?

Let’s take mining as an example since that’s huge in Canada – let’s say a mining company wants to issue debt…

A: I’ll stop you right there because there are (virtually) no mining debt deals in Canada despite the size of the industry here – that’s because mining companies have all their needs in US dollars and issue USD-denominated debt to match revenue and expenses.

In addition, many of the large players have preferred to access the U.S. market because they can get larger transactions done.

You see more domestic debt deals with Canadian oil sands companies (which have payroll and CapEx in CAD) and with other industries altogether; the 3 biggest are government borrowers, banks and financial institutions, and utilities.

Most DCM groups here are divided into government vs. corporate coverage; corporate coverage can include both publicly listed and privately owned corporations and financial institutions.

On the other hand, some DCM groups are split between public debt issuers and private placement issuers. The teams are bigger, so the roles and specialties are more defined.

Q: Interesting to note that – so let’s say that you’re issuing debt for a commercial bank. What would the FIG analyst do, and what would the DCM analyst do?

A: It depends on the type of debt issuance – for something like unsecured senior notes (a type of debt that’s below secured senior notes since it has no collateral (unlike mortgages), but above subordinated notes in the capital structure), the FIG analyst would not be too involved since we can do all the analysis ourselves.

The FIG analyst would do more work when we’re issuing hybrid securities such as preferred stock and convertible notes on the ECM side or capital notes on the DCM side.

For banks, those are really important because they affect Tier 1 Capital, which all banks must maintain above a certain level. With the new Basel III rules, there’s more and more analysis being done as regulation of these securities changes.

For the average investment-grade company or project financing, DCM handles more of the credit analysis and answers questions such as, “How much debt can they raise, and with what terms? What will the cost of the debt be, and are there any ratings agency concerns? Will the market buy into this, and should we be worried about the covenants?”

For a debt issuance, the industry analyst would provide the industry / market analysis for the sales force memo and we would focus on the quantitative /credit work.

The other difference on deals is that often the investment bankers maintain relationships with the CEO and Board of Directors, whereas DCM covers the Treasurer to CFO of the company.

The Treasury team is responsible for day-to-day funding at companies, whereas the CEO and Board focus more on corporate strategy, which includes potential acquisitions or other similarly big moves.

Models and Models

Q: You’ve alluded to the modeling work in DCM a couple times now – how would you describe it? Is it similar to what you see in Leveraged Finance?

A: It’s not terribly complicated – it’s mostly just looking at standard credit statistics such as the interest coverage ratio, the leverage ratio, and so on; and with companies such as utilities, sometimes you don’t even need to do much modeling because they’re “safe” investments.

So we might say, “Let’s say this company issues $xx of senior notes – what will its credit statistics look like after that debt issuance, over the next 5 years?”

The modeling gets more advanced when you’re working with high-yield debt, because the companies are riskier and have more spotty cash flows in the future.

Project financings can also require more modeling – there, the debt is often secured against a particular asset or portfolio of assets. You see this frequently in the financing of power plants and other assets such as hospitals, toll roads and property portfolios.

You’ll also build models to help clients answer questions such as:

  • “If we repay debt early and pay the prepayment penalty, and then we re-issue the debt at lower interest rates, what is the cost of doing that? How much better or worse off are we if interest rates go up or go down in the future? What future interest rate is necessary for us to come out ahead?”
  • “What are our different refinancing options, and which debt package do you recommend based on our current and planned capital structure?”


If you want to work in DCM, you should have a great handle on macroeconomics because it’s critical to everything we do – that’s not as necessary in investment banking industry or M&A groups, but it’s very important here.

You may even get specific macroeconomic questions (“What do you think the Bank of Canada will do this year?”) in interviews.

Q: Right, more like a sales & trading interview, though you could get macro questions in IB interviews as well.

What’s the time split between pitching and execution in DCM?

A: It depends on the market – in bad times, we might spend 75% of our time pitching because very few deals are happening.

When the economy is in better shape, it’s more like a 50/50 split between pitching and deal execution. Keep in mind that when there’s growth, clients also ask for more pitches.

The good thing about DCM pitch books is that they tend to be only 10 – 20 slides – you don’t see massive 150-page decks as you do for M&A and IPO pitches.

General market update presentations are not highly tailored to individual clients, so we cover macroeconomic indicators and what peer companies in the sector have done recently.

There’s more work involved when a client wants a pitch for a one-time event like an acquisition or capital restructuring – there, we do a lot more custom work and must work with bankers to come up with suggested financing plans.

In scenarios like this where the pitching gets more tailored, you’ll frequently go over the pros and cons of issuing debt securities of different terms, structures, seniorities, covenants and currency denominations.

Q: Most readers are familiar with the process of issuing equity, or at least with the IPO process – how is raising debt different?

Do you still create a presentation and sales force memo and pitch it to investors to build your book before the deal is launched, and then price the debt based on demand?

A: Yes, it’s a similar process, but debt deals don’t get nearly as much attention because they don’t seem as “sexy” as companies going public.

You could still find yourself doing roadshows and doing everything else associated with IPOs as well – the difference is that many borrowers issue frequently, you don’t need to do as much work educating investors.

But if it’s a company that hasn’t issued debt in some time or if they’ve just completed an acquisition, we have to spend time re-educating investors.

One difference specific to Canada is that there are 2 types of deals here – bought deals and agency transactions – whereas in the US, debt deals are usually done on a bought deal basis only.

Q: So what’s the difference between those?

A: In a bought deal, the bank acts as a principal and buys the debt first before reselling it to investors, thereby taking on much of the risk, whereas in agency transactions we act as the agent and attempt to allocate the debt to investors on a “best-efforts” basis.

All government debt here is issued via bought deals, but most corporate deals are done on an agency basis instead. This is important because the fees are different depending on the deal type, and if you take on more risk, you generally earn a higher fee.

To reduce risk in an agency transaction, we often pick a few investors who will stay quiet and then discreetly ask about their interest in the offering – we might sign up those selected investors early to make sure the company can find buyers for the entire debt issuance.

You also see the reverse, where an investor might give your sales force an order – this is called a reverse inquiry and the stronger your sales force, the more likely you’ll get these orders, which you can then reflect to the company in hopes that you get awarded the mandate to lead a transaction.

Show Me the Money

Q: Speaking of fees, how is the pay in Debt Capital Markets compared to other groups?

A: Generally there’s a 10 – 20% discount to all-in pay at the junior levels, and that gap tends to widen as you get more senior.

The top analyst in DCM can get paid about the same as the top analyst in IB, but on average pay for DCM is lower. The caveat is that DCM pay tends to be more stable and less volatile than IBD or ECM.

Governments and many corporations need to refinance debt and use debt for their operations, so there’s a steady base of issuance – even if CapEx and expansion are put on hold.

Generally, lower bonuses are not a surprise because margins are thin with investment-grade debt, and the fees are quite low.

To give you an idea, 0.5% is the most you can earn on an agency deal in Canada. So if we issue $100 million of debt, the entire syndicate would only earn a $500,000 fee on that before legal fees and before splitting it up among the members of the syndicate.

For public investment-grade debt deals, the fees vary from 0.1% to 0.9% depending on the term to maturity and transaction type. We earn more on bought deals due to the greater risk involved and fees can vary for private placements.

For high-yield debt, the fees can range from 1.5% to 3.5% but deal volume is much lower than in the investment-grade bond market.

These lower fees are specific to Canada and the different transaction types we have – in the US, fees are generally higher and margins are better, and so my guess is that you don’t see the same type of discount with bonuses that you do here.

The other point is that a bank has more ongoing commitments with bond deals since lending (via the Corporate Bank) influences who gets to lead a transaction, more so than in the equity space.

Q: That makes sense – lower fees and lower margins, at least in Canada, and so bonuses are slightly lower as well.

What about the culture of the group?

A: If investment banking is a marathon, DCM is more like a sprint. Bankers who move over here from M&A and industry groups find themselves working fewer hours, but feeling just as tired, if not more tired, since the intensity is much higher.

At my bank, the culture of our group is very different from what you find in IB because it’s separate and closer to Fixed Income, by virtue of being situated adjacent to the trading floor.

So we interact more with our traders rather than traditional bankers, at least on an everyday, in-person basis.

The DCM seating is also often structured like the trading desks too, sitting in rows and close to one another, regardless of rank. You don’t tend to have your own office or cubicle and as a result, you also have different habits.

As an example: in investment banking, you would never answer the phone for your MD. People simply don’t answer the phone for others, but in DCM, just like on the trading floor, we do not let calls go unanswered.

So if everyone on the desk is gone or busy, you might find yourself speaking with clients or fielding other peoples’ questions – Analysts and Associates are expected to do their best to pick up the phone and cover for the senior bankers who may be away or on their other lines.

That varies by bank, though, and if your DCM group works more closely with IB and is seated with the Investment Banking Division, the cultures will be more similar.

Q: Why do you think IB and DCM are so different? It seems like there’s less of a cultural difference between ECM and traditional IB.

A: Part of it is because equity investors and debt investors look for very different qualities, and investment bankers tend to understand equity investments much better.

Equity investors seek growth, and acquisitions and aggressive expansion plans excite them.

Investment bankers, of course, also like to pitch acquisitions and dramatic changes in the business because they earn fees when companies go through with these deals.

But debt investors, while also looking for some growth, are more concerned with stable cash flows and interest coverage.

Acquisitions and divestitures often scare them because they could disrupt a company’s cash flows and potentially violate covenants. Also, LBOs and other M&A transactions can result in significant changes in capital structure that may heavily subordinate existing debt.

So not surprisingly, investment bankers tend to feel more comfortable working with people in ECM, since they pitch investors and buyers in similar ways.

Q: That makes sense. What about the hours? Let’s look at best case, worst case, and average case scenarios.

A: The best case is 60 hours per week – that happens when the market is slow and few deals are happening. So you get in at 7 AM each day, leave at 7 PM, and don’t work on weekends – similar to traders.

When deal flow and pitches pick up, it’s not uncommon to work 90 hours per week, just like in M&A. The average case might be somewhere in between, so maybe around 70 – 80 hours per week.

To give a concrete example from when time are busy: Even Associates here often work 7 days a week, from 7 AM to 9 or 10 PM on weekdays, and then 8 – 12 hours on weekends.

Q: It sounds like the hours are more intense than in ECM – why is that?

A: One issue is that bankers can do a lot of the heavy lifting with equity issuances since they understand them better, which reduces the burden on ECM.

Another reason is that DCM is higher-volume but lower-margin than ECM – and all else being equal, more deals means that you’re working more.

In Canada, the income trust structure is being phased out and that has also led to a boom in the high-yield debt market.

With so many companies interested in coming to market as they convert back into corporations, we find ourselves doing a lot more company-specific analysis and pitching and more debt IPOs.

Exit Opps: What You Do Next

Q: Right, that makes sense – more deals and less banker help equal longer hours.

What about the all-important exit opportunities? Where do you go after working in DCM?

A: At the junior levels, most of the exit opportunities are within the bank itself.

People often move from DCM to other desks on the Fixed Income floor – Syndication, Sales, Research and less often to Trading – and occasionally to industry or M&A groups in IBD or even ECM.

It is not common to move into private equity or hedge funds, and I can’t think of a single analyst at my bank who did that.

Research desk analysts and traders are better-suited for hedge funds because they analyze companies and reach their own conclusions, whereas we’re more process and product-oriented.

But the good news is that post-financial crisis, analysts with DCM experience are looking more and more attractive to other groups within investment banking.

In the past, bankers used to come up with crazy financing scenarios for proposed acquisitions that would never work in real-life under normal conditions, but we were in a liquidity bubble back then with lots of cheap financing.

Today, there’s a lot more scrutiny out there; also, post-crisis, banks have higher capital requirements so you need to understand the impact of financing in more detail.

Q: I’m surprised that it’s so difficult to get into private equity and hedge funds from DCM – I would have thought you could leverage all that debt experience (no pun intended) to great effect when interviewing.

Do DCM analysts get any exit opportunities that you don’t see in other groups?

A: Yeah, the issue with PE is that many LBOs use high-yield debt and you don’t work with it as much in DCM, though there are exceptions if your group combines DCM and LevFin.

And few hedge funds invest in investment-grade debt, so there’s little direct overlap.

Some DCM analysts move into the Treasury departments of normal companies, which is something you don’t see elsewhere.

That’s because the Treasury is responsible for day-to-day funding for the business, and in DCM we spend a lot of time developing relationships with Treasury departments anyway.

If you wanted to move into corporate development instead, you would need corporate finance experience.

Q: Interesting to hear about the Treasury as an exit opportunity.

What are your future plans? Will you stay in DCM or try to move elsewhere?

A: I’ve enjoyed capital markets a lot, and working in DCM during the credit crisis was both a terrifying and interesting experience that taught me a lot about how important debt and liquidity are to the global economy.

However, I don’t want to become too specialized and as I mentioned before, DCM is a very product-specialized and process-focused job.

So I’m thinking about moving to an investment banking industry group for a few years, or maybe doing a rotation there, so I can learn more about strategy and corporate finance.

I’m not considering the buy-side, and it would be difficult for me to even go there without moving to another investment banking group first.

I may go to business school at some point, but I would just be leveraging that to move to a different group or a different bank.

Q: Awesome – thanks for your time.

A: No problem. Hope you learned a lot about DCM!

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. Hi,
    Thank you very much for this article, quite useful. I’m set to graduate in 2017 from b-school in Europe (master’s not mba) and want to go to LevFin or IBD eventually. Do you think it would be a good idea to get an internship in DCM before looking for full time positions in LevFin? What about IBD?
    My experience now is mostly a gap year internships (18months) in corporate banking in bb european bank which I’m currently finishing.
    Thanks a lot in advance!

    1. M&I - Nicole

      Yes if you do get an internship in DCM, this will be useful for leveraged finance and IB roles. Please also refer to

  2. Hi,
    Great article! I have some doubts regarding the exit opportunities of DCM. I am not so interested if it is possible to move to PE or something like that. I have been looking around on the internet and I haven’t seen anything about the people that leave DCM and go to work for a company (for example an utility or an oil & gas copany). I haven’t find too much, is this because it does not usually happen or just because there is not too much information about it? And also, if people from DCM move to these kind of companies what do they do there? Is it possible to move to the business development/ corporate development unit of the company or maybe other positions? I though that if you work in investment banking even if you don’t do m&a you could always move to a corporate and do many different things there.


    1. M&I - Nicole

      I think there aren’t too many people who work in DCM so information on this topic may not be readily available. And in my experience most people from DCM usually move to say other areas in finance i.e. buy side and I am not 100% sure of people who move to work in other companies. DCM is part of banking but it isn’t like M&A or other industry groups in IB where the skills are more transferable to corporate, where you can work in corporate finance, etc.

  3. Hi Brian,

    Thank you very much for posting all this. It was great information. I have an interview coming up for an entry level DCM analyst position at a large bank and to be honest, I am not quite sure how to structure my answer for “tell me about yourself”. Can you please help? Is it going to be the same as the your recommendation for Investment Banking interview?

    Thank you.

    1. M&I - Nicole

      Yes I’d say so, though I’d talk about why you’re interested in capital markets, and debt products in particular.

  4. To both the author & mergersandinquisitions: Thank you! I got an offer from a BB in DCM (Think Citi, BAML, JPM, etc.. Attending a target school but with sub-par professional experience) and this article really gave me hedge during the interview process. Most of the questions I was asked were rather technical or related to what was happening on the markets. However, the one question that was asked in each of the 5 interviews I went through was: What tasks do you expect to do on a day to day basis. I had no idea prior to reading this article!

    1. M&I - Nicole

      Glad you found this article useful!

  5. Hi,

    Great article! I was wondering whether distressed debt would be a possible exit opportunity for someone with DCM experience? Thanks

    1. M&I - Nicole

      Yes, distressed debt is a possible exit opportunity in this case.

  6. Hi,

    Thank you for all of your guides. I am currently a senior in college and I’ve accepted a full-time BB Commercial Banking Credit Analyst (asset-based lending) offer after graduation. My question is two-fold:

    1) From a technical aspect, what are the similarities between ABL and DCM that I could use to leverage into the DCM group?

    2) When is it a good time to begin networking with people from my bank to DCM? I feel that it may be too early to reach out to senior bankers in DCM considering that I haven’t even worked a full day in the office yet. However, is there a way to get started on this process before I start working after graduation?

    Thanks for your help.

    1. M&I - Nicole

      I’m not sure about ABL and DCM so I’d leave this to readers.

      Yes you can start networking and building your relationship as you work in the firm. It maybe too early to start networking before you start your job.

    2. On your first question, there are a lot of similarities between ABL and DCM – take a look at the article on Structured Finance to get more ideas:

  7. I am currently an intern working at a foreign bank placed in NY.I am not sure whether I am in DCM or IBD because I do not interact with the S&T team as frequently as it is stated in the post. However, I do participate in credit analysis, and capital raising through investment grade debt. The group I work underneath specializes in FIGs but also in credit products. Is it possible that some DCM teams only intereact with the IB side? Or, does DCM always interact with the S&T group?

    1. M&I - Nicole

      Yes it is possible, depending on how your team is structured. Not all the time.

  8. So a company is thinking of raising capital (convertible debt or straight debt). Which data would an analyst look at in his financial model or analyse to account for this. Basically identifying what each option might look like and present it in a pitch book. Thanks.

    1. We responded to this on BIWS (but for anyone else reading, look at dilution form equity and convertibles vs. interest expense/principal repayments from debt, and if a company can’t afford debt, raise equity… otherwise in most cases a company that can afford to do so will raise debt, and maybe a convertible if there isn’t a clear winner either way).

  9. Jeremiah

    I have an internship in Investment management this summer, but am now thinking that I may like to work in Capital Markets Origination in the future. Following my internship, would it be best to ask for an interview in ECM/DCM straight away, or would spending a few years in IM before trying to move across to ECM/DCM be better? Do you think the skills learnt in IM could be transferable to CMO, particularly if I’m working on a fund that manages the relevent asset class (i.e if it was a eurozone gov’t bond fund, could I move to DCM?)

    1. M&I - Nicole

      If you’re working for IM it maybe challenging to move into CMO since skillsets are different. With the above being said, I’d try to move sooner rather than later because the longer you spend at IM the more difficult it is to move into CMO given the different skills. Perhaps the best path is to transfer internally or go through a target MBA program. Of course you can spin that you understand how buy side thinks which helps with CMO, though you still need to demonstrate that you have the relevant deal experience.

      1. Jeremiah

        Thanks, I really appreciate your reply! I think I’ll take your advice and attempt to transfer internally.

        1. M&I - Nicole

          You’re welcome!

  10. Hi

    I had a DCM Analyst interview with a bulge bracket firm last August 2013 but did not receive an offer. I had a follow call with the MD of the group around Oct 2013 and was given constructive feedback on how I can break in next time around should the opportunity arise. I figured I would reach out to this same MD now (March 2014) that bonuses have been paid out on how best to position myself this year for an interview with this firm again. Is this a good idea timing-wise? Also, I am struggling with how best to put together this email since I have not spoken with him in about 5 months.Should I outright just ask “how best to position myself for an interview” via email or should I request a call or in-person meet and then ask him? Any suggestions would be greatly appreciated. Thanks!

    1. M&I - Nicole

      Yes I’d approach him again since it has been 6 months.

      Yes I’d email him and set up a coffee (in person the best) to chat if he’s available.

      Good luck!

      1. Thank you very much Nicole. Great advice. I was able to get an in person meet next week. Besides knowing what is going on in the Corp bond market space and remembering his interview critique from our last conversation, what do you think are the key things I should be focusing on with this follow up? Anything else besides “how best to position myself for an interview?” Thanks!

  11. Brian Larentil

    Could someone elaborate more on how DCM is a hybrid option between S&T and Investment Banking? Is it hybrid in terms of the skills you need or by the nature of the job you’re a middle man? Thanks!

    1. It is mostly the skills you use – a lot more following the market and recent issuances than in an IB coverage group. You still do deals, so in that respect it is different from trading, but it is more markets-driven in terms of how you spend your time.

  12. Treasury Guy


    Very informative article. You mentioned that DCM guys have the possibility of moving over to treasury but, what about the other way around? I am currently in a FLDP at a F500 rotating through Treasury and Corporate Development and was wondering if it is possible to move on over to DCM and the potential steps in doing so.


    1. It’s possible, but you’d need to prove you learned the modeling/analysis/deal skills on your own and can hit the ground running… so maybe network with bankers you’ve worked with, learn those skills on your own time, and make the ask once you’ve gotten to know them over a few months.

  13. High Yield

    Can somebody please explain the key differences between EU and US DCM groups?
    Thanks in advance!

  14. Your post covers wide aspects related to investment banking. It was a good learning experience going through your post. Thanks.

    1. M&I - Nicole

      Thanks for your kind comment!

  15. Hi Brian,

    I recently stumbled upon this job posting and wanted to hear your thoughts…

    Is this investment banking? Looks like a very niche group within maybe the DCM team? Could one call himself an ‘Investment Banking Analyst’ doing this kind of work?

    Looks like not much modeling is involved (kind of like a capital markets group). What do you think the lateral prospects are after like a year? I know the GS name does go a long way…

    1. M&I - Nicole

      I am not 100% sure but yes, this group looks like its within IBD, though I’m not sure if it is within DCM. Yes you’re technically an IB analyst though you may not necessarily be on an industry team. Lateral prospects – I think you can move to DCM or other market-related debt groups pretty easily. Not sure about industry groups in IB because I’m not sure how much valuation work you’ll gain in this role. However, if you perform (very) well within GS and people like you, I’m sure they will try their best to accommodate your requests.

      1. Nicole- thank you very much for your response. Could you please elaborate what you mean by GS potentially accommodating my requests? My main goal would be IB 2-3 yrs out of school, gain that technical expertise and then make the move to PE afterwards. From my experience, it is (nearly) impossible to change groups internally within the same firm, hence why I asked about lateral prospects.

        I am in no way discrediting your original response, but was wondering if you could have Brian also provide his insights? I just want a second opinion on the role as I’ve actually never heard of such position before as part of ‘investment banking’.

        Thank you so much

        1. M&I - Nicole

          If GS really likes and wants you to stay, the company may give you the option to move within the firm. I knew of some people who have successfully moved within a firm so it really depends on the individual.

          I’ve asked Brian, and Brian isn’t 100% sure of what the role entails either, though you may find this link interesting.

          Good luck!

          1. I moved within one of the top 3 investment banks. I might move again. If you keep showing progress and network your ass off it will happen if you want it to. I think people bounce around no much, don’t get me wrong if you have a great opportunity go for it. But I seen a lot of people go from hedge fund services and bank a to the same position at b, they got 15,000 but for the next 3 years there skills sets stay the same. So I guess you have to weigh things out.

  16. Brian,

    I have a potential offer at a DCM group at a middle market (think Houlihan Lokey, Piper Jaffray. They have no leveraged finance group as they don’t have a balance sheet and don’t commit capital. Their DCM group does debt capital raising via private placements on a best efforts basis. They do everything (from middle market to large cap; but mostly middle market) including: high yield bonds, first/second lien, typical bank loans, structured debt (hybrid mezz/equity), preferred equity, etc. supporting M&A/LBOs, dividend recaps, opportunistic recapitalization and restructurings/turnarounds/dips/exits, etc.

    Also they occasionally work on investment grade private placements but its primarily international companies raising capital in the US.

    Would you say that this opportunity combines skill sets from Leveraged Finance into DCM ? It seems more Leveraged Finance on the surface as they deal with high yield debt based on the above paragraph’s description. And I was also wondering about exit opportunities to PE and other buyside roles ?

    Apologies for the long post. Thanks.

    1. M&I - Nicole

      I am not 100% sure though I’d say so. I think you can look at BB levfin, PE & placement agent roles for exit opportunities. You may also find this link useful:

  17. Hi Brian,

    There is something I don’t understand about how net working capital affects the free cash flow.
    When net working capital decreases, free cash flow increases, right? But then what would happen if cash increases (which increases current assets and as such, increases net working capital)? Obviously, cash going up couldn’t possibly decrease free cash flow, could it?

    1. Changes in cash and debt are excluded from working capital changes on the CFS because they are not related to the company’s operations. You have to be really careful what you read online because plenty of people say “Working Capital = Current Assets – Current Liabilities” but that is not really how it works on the financial statements or when calculating FCF. You exclude cash and debt (and sometimes even include operationally-related long-term asset and liabilities such as long-term deferred revenue).

  18. To the guy who wrote this:

    Thanks. Your article is very helpful to those who aspire to become bankers. It’s a very lucrative job. The only difference between those who are earning this lucrative pay and those who aren’t comes down to ignorance, not so much ability. Hence forth, you are doing something good here.

  19. Anyone have information regarding the Loan Syndication group within DCM? Any difference in exit opps or pay?

  20. Hi All,

    I have an interview coming up for an entry level DCM analyst position. When the article refers to market indicators, which indicators are most widely used in DCM? In other words, which macroeconomic indicators are most important in DCM work?

  21. This article was very helpful in explaining DCM to me. My challenge is recruiting someone with this experience. We are an o/g company based in Calgary with global operations. We are seeking an experienced Corporate Finance Advisor as we are getting into more sophisticated credit facilities and issuing bond deals. Please contact me to discuss further. Thank you.

  22. What is Middle-Market Debt(Loans/Bonds)?

  23. I understand what a trading book and a banking book is, but what is a loan book?

  24. Will you have leverage fin interviews in the future?

    1. M&I - Nicole

      Will share your thoughts with the team

  25. PubFinFanatic

    I’m currently working in credit rating (pub fin), and would like to move into DCM possibly even pub fin banking, how difficult do you think the jump would be? would would i have to do to land an interview?

    1. M&I - Nicole

      Network w DCM bankers. Understand DCM inside and out. Know why you want DCM. How difficult the jump will be depends how much effort you’ve put into the three

  26. What is the Capital Markets desk? I saw a job title named “Capital Markets Desk”, what is the job functions, description, skills for this role?

    1. M&I - Nicole

      As I’ve mentioned in my previous answer to your similar question before, there should be job specs below the job title.
      We’ve written a few articles on capital markets. Pls refer to

  27. What does Formal Credit Training program mean? Does it mean an internal course/program offered at a bank to their employees or can an external candidate complete a open enrollment course at a training school on their own (i.e. someone who doesn’t work for S&P, pays out of pocket and enrolls in an credit course at S&P)

    1. I think it can be either one, would have to see the syllabus to know one way or another. Most of the time programs like that are offered in-house.

  28. HI,

    Thank you for the article I found it really interesting and insightful, even though I am currently in DCM there is a lot here that explained the wider workings. I am an analyst and am trying to decide between remaining in DCM (my bank includes lev finance)and moving to a relationship management role. I’ve scoured the web pages and your site but couldnt find much on RM roles. Do you know where I might be able to find somethin. Am trying to weigh up the pro’s and con’s of each….

    1. M&I - Nicole

      what sort of relationship management roles are you referring to?

      1. Hi Nicole,

        The role is like country coverage, so I would look after clients in two regions. I had a look through the site and found some excellent information on industry coverage and was wondering if there was a similar resource for country coverage. Am trying to figure out more about where I could move to after, would I be limited by my geography experience or would it be possible to move back to a product specialism etc :s

        1. Relationship management and DCM are completely different roles, and if you want to do IB/PE/HF long-term I would do DCM. Relationship management would be more for fund-raising type roles and so on that aren’t directly in finance. And you would be somewhat limited by geography. We haven’t covered all the geographies here but more are coming soon.

  29. Just from my experience as an analyst in DCM in Canada — we were paid as much or more than the industry group analysts. But it probably depends on the bank.

    1. PubFinFanatic

      Brent, thanks for your post, would you mind sending your details, I’m interested in DCM in Canada, currently work at a rating agency, and would love to chat.

  30. +1 for public finance

  31. Kyle Wagner

    Apologies if this is a repitive request, but I’d be interested in an interview/day in the life type of article for Equity Research. I found the ECM and DCM interviews extremely helpful and interesting, and I think that Research would be of interest to some as well.

    1. It is coming up

  32. Jake Blanton

    I think it would be really helpful to get public finance on here. Its the one thing you are missing. Dont forget about us

  33. I worked for a Mortgage Brokerage/Mortgage Bank on Commercial Mortgage/Commercial Real Estate Deals. Can this experience be leverage to help me get into Debt Capital Markets since Mortgage Loans are a class of debt? Is so how?

    1. Yes but you’d have to network like crazy, possibly aim for smaller firms, and also get lucky… say you like debt but now want to apply your experience on a larger scale with different types of companies

      1. I’ve been interviewing for Credit risk modeler/Lending officer roles with Commercial banks and credit analyst roles for High yield bonds/and other debt instruments (CDO/CMO) for Asset Managers. However they all automatically assume I was a loan officer underwriting residental mortgage loans and say that it has no relation to what they’re looking for.

        1. Then you have to spin your resume / elevator pitch around and focus on other points and maybe describe what you did differently

  34. Do you have any insights on how to make the jump from DCM to industry specific groups? Is it that the earlier you jump the better given that your mind is set on going to a P.E.? It is a sensitive issue, so how to make a switch w/o pissing off your MD? Thanks! This is a great site.

    1. Yes the earlier the better. Make friends with people in other groups, get them to know and like you, then ask them about moving first before going to your own group.

  35. smartrip

    I’m exhausted!

  36. Mainly banks,asset management companies (pensio funds,mutual funds) and credit focused hedge funds.

    1. I wonder why these were not mentioned as exit opportunities.

      1. *I meant specifically the asset management companies

        1. “People often move from DCM to other desks on the Fixed Income floor – Syndication, Sales, Research and less often to Trading”

          Although it does not mention specific companies,an it excludes hedge funds afterwards,you can work in these roles in any company that has them.I think credit research is the most common,since it does not require specific skills needed for trading and sales.

        2. Yes they invest in a lot more than just debt so that is part of it, skills in DCM are too specialized

  37. Hi,

    Thanks for the site and for this article. Who is it that typically buys investment-grade debt, and would transferring to these firms be an exit opportunity for those in DCM?

    1. Other conservative banks, pensions, mutual funds, maybe some HFs but they prefer more risky investments so you don’t see them as much. The issue is that all those places invest in other assets as well so it’s hard to make the leap directly from DCM.

  38. Friggin. Love. This. Site.

  39. Hello

    I am gearing up for an IBD Analyst interview. I have worked in DCM for a year and want to make the transition to get more quantitative/modeling experience. I have an interview lined up and need some inputs about what to expect in the interview, considering there is minimal valuations/modeling in DCM. I was working on the Origination side. I know what I was doing in my role in DCM and get talk about it very well. Should I expect very technical Valuations/Modeling/Accounting/Bond Math questions.

    Thanks for your help in advance. Much appreciated

    1. You will get all the standard questions despite having worked in DCM. Maybe not bond math if it’s a standard IB interview, but the rest will all apply.

    2. hi Frank i have a origination intern interview coming up (next week), just wondering what kinda technical questions will i be expecting?

  40. Douglas

    Okay, this is a very basic question, but if you work in DCM/ECM are you an “investment banker” or a “DCB/ECM banker”? Just trying to get my semantics right!

    1. Varies by person but I would still classify them as investment bankers, though some would not… probably easiest just to say you work in ECM/DCM

      1. Actually,Investment Bankers are all those who work in M&A,DCM,ECM etc..
        But,going down to more specific divisions,you may also find reference to M&A as investment banking again,while DCM will just be DCM.

  41. public finance, come on! Lets get public finance information out here

    1. It’s on the list.

      1. Just completed a Public Finance 6 month internship. Feel free to reach out if I could assist in any way. I’m always looking to help

        1. Cool will do that a bit busy over next few weeks but will contact you in the future

        2. Hello Kevin,

          What are some exit options for public finance, how would you say bonus were compared to IBD from talking to analysts. Also, do you get a good salary bump as an associate and VP

  42. I’ve been waiting for this one….thanks!!!!!!

  43. Gwalter

    To the Interviewee: Any thoughts on where Public Finance fits with or compares to DCM? I realize that Public Finance in Canada may be a bit different than in the US.

    1. Public finance is similar in some ways but really a separate group from DCM most of the time since they focus only on governments and specifically project finance-type deals like toll roads, power plants, etc. You are probably more limited coming from public finance since it is more specialized, though analysts often move into other groups within the bank.

  44. james.c

    Great Article!!!

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