So, junk bond issuance hit a record for October - an amazing development. Will that mean a flood of hiring in high yield issuance/advisory?
No, says one high yield analyst. "I don't see (those firms) adding bodies."
The next question - will the inevitable crash of some of this debt come in the next few years? An increase in headcount won't occur until the junk that's being issued defaults.
What junk are we talking about? If history's any guide, things like MGM Resorts' $500 million of senior unsecured bonds, issued last month. Those Caa1/CCC+ rated six-year notes, which contain none of the typical high yield debt covenants, could very well default before their call date.
(Arguably, one of the few good assessments you could make about the latest round of high-yield issuance is that it doesn't include financing for the Revel Casino in Atlantic City. Backers of that ill-fated project, on which Morgan Stanley has already lost more than $1 billion, are reportedly attempting to raise more debt to finish it.)
Already benefitting from corporate defaults since the start of the recession, distressed advisory firms stand to gain even more business in the next few years. Whether or not hiring ramps up there remains to be seen. Our high yield analyst wouldn't even venture a guess.
So where might hiring occur? The analyst thinks you'll see it in advisory services, including M&A.