My first capital structure

Context

In summer 2024, after my first year at NYU, I was an investment banking summer analyst at GreensLedge, a firm that advises on structured credit.¹1 Structured credit means pooling loans or other debts and selling securities backed by them, in layers that carry different levels of risk. Most of my work was on CLOs.²2 A CLO, or collateralized loan obligation, is a pool of corporate loans funded by selling notes in layers of different seniority. It was my first formal internship, and it came directly out of my freshman-year cold emails.

The problem

Structured finance is a specialized corner of the industry. The products are technical, the vocabulary is dense, and a lot of the job is making complicated structures understandable to investors who have to decide quickly whether they want in.

I arrived knowing almost none of it. I had to learn fast enough to be useful on live work.

What I did

• A database of past deals. I built a database of more than 50 historical CLO transactions, tracking size, credit rating, pricing, structural terms and the characteristics of each manager, so new deals could be compared against what the market had already done.
• Comparables on a live deal. On a rated feeder fund CLO of about $340 million, placed together with a large bank, I built five years of comparable deals, looking at returns, yields, tranches and manager fees. I also supported the offering memorandum and the internal presentation.
• Redrew the structures. For six structured products, I redesigned the visuals that showed investors how each deal was layered and who got paid in what order. Clearer visuals helped the team turn investor materials around about 30% faster.
• Investor outreach. I maintained the investor outreach tracker and supported outreach to more than 500 investors.

What I learned

Before that summer I thought of corporate finance mostly as valuation: what is something worth? A CLO showed me another side of it. The same pool of loans is cut into layers, and each layer goes to a different investor with a different appetite for risk. The most senior investors accept a lower return to be paid first. The equity at the bottom takes whatever is left, and the most risk.

Cash is paid in this order

1. Senior notespaid first, lowest return
2. Mezzanine notespaid next, more return
3. Equitypaid last, takes what is left

Losses hit in this order

That made finance feel less like a single calculation and more like architecture: deciding who carries which risk, and at what price.

That fall I joined Stern’s Special Situations Investing Group, one of a small group selected from more than 300 applicants for a year-long program on distressed investing and restructuring. It was the natural next step from a summer spent on capital structures.

Footnotes

1. Structured credit means pooling loans or other debts and selling securities backed by them, in layers that carry different levels of risk. ↩

2. A CLO, or collateralized loan obligation, is a pool of corporate loans funded by selling notes in layers of different seniority. ↩