High Yield and LBO
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If you are a Corporate credit analyst, you will need to understand what differentiates High Yield and Leverage Buy Out debt from the more plain vanilla corporate bonds. Indeed, rating agency data shows that non-investment grade rated issuers today represent about half of the total globally from 20% two decades ago. What makes them different? Simply said, their much higher credit risk profile. These issuers are also much more dynamic, requiring very alert surveillance. Take this course, and you’ll see that this is what makes this asset class a lot of fun!
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This course equips you to differentiate the different levels of risks within corporate high yield credits. In the first part, you will learn to evaluate liquidity profiles and read distress signals, while the second will prepare you to assess recovery expectations through the analysis of debt structures, covenants and collateral. The course will also provide a reminder of the key participants in the high yield markets.
Specifically, you will learn to:
Identify the main cash flow profiles by sectors
Prepare refined liquidity forecasts with adjustments to the cash position
Spot financial distress signals in the governance and financial communication
Differentiate the main insolvency regimes
Recognize the main debt structures, including subordination risk
Analyze loan and bond agreements and the main covenants
Make an overall assessment of the recovery expectations on an internal credit scoring scale
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The course is targeted to intermediate credit professionals or academics, including:
Fixed income research analysts
Private equity analysts
Credit risk managers
Investors
Investment bank analysts
Treasury professional
Academics and advanced finance students
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We adjust to your needs. The “sweet spot” is 2 days, providing enough time for all topics and practice team through case studies and credit committees. We can condense or extend the program, but we always dedicate time for practice as it remains the best way to learn. Class sizes are limited to 20 analysts.
Below is an illustration for a 2 day program.
Pre-course: Online introduction to credit risk
4 – 6 hours of work
The 5 modules and the short test require 3 – 5 hours of work depending on participants’ familiarity with the topic. The 5 modules include:
Dimensions of credit risk
Measurements of credit risk
Cycles, bubbles and crises
Funding sources and the capital structure
Credit rating agencies and credit ratings
In the classroom
Day 1
9:00 - 10:00
Overview of high yield and leverage finance markets
10:00 - 12:30
Identifying key risks of high yield and leverage finance issuers:
Sectors, leverage, liquidity and governance
12:30 - 1:30
Lunch
1:30 - 3:30
Preparing liquidity forecast, adjusting cash flows, testing financial covenants
3:30 - 5:00
Spotting distress signals in governance and financial communication
5:00 - 5:30
Set up Case Study on High Yield credit
Day 2
9:00 - 10:00
High yield credit case study
10:00 - 11:00
Analyzing leverage finance credit documents: covenants and collateral
11:00 - 12:30
Key recovery drivers: insolvency regimes and debt structures
12:30 - 1:30
Lunch
1:30 - 3:00
Practice: analyzing high yield / LBO credit documents
3:00 - 5:00
Estimating recovery expectations: approaches and case study
5:00 - 5:30 Course wrap up