Adding a Premium Tier and Finance Lingo

Welcome back,

I have an announcement – I’m adding a premium tier to my newsletter. I’ve built a lot of resources from my experiences in credit and have a lot more coming. I love writing, I absolutely love it. But it’s a big commitment. While sometimes it takes me 5-10 seconds to come up with a meme, writing has been a lot bigger of a time commitment. It’s been an important commitment though, because there’s a real problem to solve. There’s a significant lack of credit resources for those looking in from the outside, and I’m working to solve for that gap. The limited credit content from others I’ve found goes for almost $400/hour, which is crazy and out of control! There’s a billion banking and first year private equity associate resources, but credit is significantly lacking despite the fact that credit is becoming a more compelling career path and a highly topical asset class.

The latest piece I’ve been building out is focused on interviews in credit, obviously a crucial thing to write about given landing in the right credit seat can change the trajectory of someone’s career. Given that the content and playbooks I’m putting out there can be used to help you get a job in credit & stay sharp in credit, I realized it’s time to add a premium tier. Naturally, this writing can take a significant amount of time, so I believe this is the right balance going forward.

What Premium readers receive: 25% of posts going forward will be premium only and several of the old Credit Resources posts are now accessible just for premium readers. Premium plans are annual plans of $105/year. The page to sign up is here.

What free readers receive: 75% of posts going forward will continue to be sent out to everyone. Free readers, however, won’t have access to premium Credit Resources posts. Btw – my annual compensation report will always, always, always be free and accessible to everyone. It’s important to me to continue to report broadly on how credit compensation trends are looking and to respect the contributions of everyone who submitted anonymously.

I’m going to continue to post at least twice a month – and we’re going to cover a lot of ground. More credit resources, market commentary, interviews, and opinion pieces are coming!

Separately, my Fantasy Football newsletter put out its first recap piece earlier this week. We covered every matchup and highlighted the players you need to target ASAP on the waiver wire. If you play Fantasy Football or bet on NFL games you need a newsletter like this so you don’t start the wrong player or have your parlay blown up. We’re cranking out recaps every Sunday night this season, so make sure you sign up below:

With all this laid out – let’s go talk finance lingo:

These sayings are from my experience on the street and also reinforced from this post where I asked for further suggestions. I mainly included the deal and credit oriented sayings. By the end of this you should have a lot of your finance lingo questions answered and maybe might better understand a few of my more niche memes. Let’s dive head first into this comprehensive list:

Finance Lingo

Let’s start with some Credit and Basic Banking lingo. We’ll get into classic deal phrases later down the list:

Price talk: Where a deal is being contemplated at. “Price talk is at xyz yield or xyz pricing & OID”

Tightened vs. Widened: #1 rule in bonds – if yields go up, it means prices are going down. And vice versa.

“The spread has tightened” = the yield on the bond is coming in a bit, this may be due to price rising from 95 to 98. “The spread has widened” may mean the price has fallen from 98 to 95. Rising prices/lowering yields = improved market environment/the issuer is performing better, and vice versa as yields widen.

Bps: basis points, pronounced “bips”, 100bps = 1pt. Some degens call it “beeps” but that’s insane, please say “bips”. Don’t say “b-p-s”, that’s also insane. Bps are used to talk about bond/loan price movement, as well as how gross margins, SG&A, Adj. EBITDA margins expand or decline.

Bulge Bracket (BB): Can’t believe I get f***ing questions every time I include “BB” in a meme. Are we really that far off from the “DB is not a BB” memes of the late 2010s? This term originates from how you see a lead bank shown on a tombstone (a tombstone is a marketing document created by bankers to show they've underwritten and are syndicating a debt deal or an IPO, for example). A bulge bracket bank is meant to imply a massive bank that is a top 10 leader in the league table and is regularly actively in the leveraged finance, ECM, or DCM markets. Hence, the names you typically see plastered on the tombstones of big deals. The “DB is not a BB” meme, originates from DB not really cracking the top ten, or from having poor deal flow. Additionally, BBs pay better than smaller banks, so this was also a crack at DB’s lower compensation range for its workers.

Bottom bucket/Top bucket: What’s bottom bucket? That could never be me. Joking aside, in a bonus pool there are outperformers and underperformers. Let’s say the average bonus is $100k (which is more of a 2021 phenomenon than how things are currently going for younger bankers lmao). If you’re a top performer, aka top bucket – they’re going to incentivize and reward you with more $ so they’ll give you $140k. That’s a top-bucket analyst right there. If you’re an underperformer who needs to improve, they’ll give you a bonus at the bottom of the range, let’s say, $50k. Hence, the phrase bottom bucket. A bonus pool refers to the amount of $ allocated to pay your people.

League Tables: Same thing as the Premier League or looking at the NFC East – a ranking of banks based off of deal volume for the year. You’ll see league tables vary by M&A activity, IPO issuance, debt issuance, etc. BBs lead the league tables.

Bake off: A competitive process where investment bankers, pitted against each other, will try to compete in a limited time frame for new business.

Dry powder: Having capital on hand to deploy. “Blackstone has a lot of dry powder".”

New issue: This means a new deal coming to market.

Secondary: A Company that has already syndicated and trades (either actively or with illiquid marks). Ultimately, this is a name that already hit the market and you’re looking at later on.

Building a book: The sell-side is looking to build a book to syndicate a debt or equity deal. This involves calling buyside clients up and getting a sense of how much of an allocation they want on a deal.

Oversubscribed: Demand for a deal > supply for a deal. If a $1B deal has $3B of demand, then the book is 3x oversubscribed.

Full Allocation: “Congrats on the full allocation” is something most lenders never want to hear. While oversubscribed deals imply strong demand (cause it’s probably a good Company), a deal where you’re getting the exact amount you want means that the sell-side probably struggled to build a book. Normally, a lender may ask for a $50mm allocation and get $25mm of a new issue for a healthy deal. If you get the full $50mm though, it probably implies “Holy shit, this was a bad deal that didn’t get a lot of demand, and now that I’m stuck with a full slug. Wtf did the rest of the market know that I didn’t know?” Not a fun thought to have. This typically happens when crappier banks are syndicating a deal.

Seat: I say this a lot – “Seat” = Job. For example, “___ Capital is looking to fill a seat”

On the beach: I’ve heard this a couple of different ways – 1) in consulting “on the beach” meaning you don’t have any billable work going on and you’re just sitting around. 2) as lingo that you’re between jobs or unemployed.

Turns: If a Company is 7x levered, someone may say “there’s 7 turns of leverage” instead. Or when leverage goes up, they may say “it added a turn”.

Off the desk: = “I’m not in front of my computer right now.” This means you may be going to a doctor’s appointment, picking your kid up from school, going on a secret interview, etc.

Color: “Can you provide more color on ___?” Color means details, information, etc. You’re asking someone to expand on a statement. This is a standard sell-side analyst and buy-side credit/equity analyst ask.

Top line: “How did the top line do?” = “How was revenue?” Revenue is at the top of the income statement.

“Hit the bid” and “Lift the offer”: The former means to sell at the bid price, while the latter means to purchase at the ask price.

Yard & Stick: A yard is a billion, while a stick is a million. Part of the purpose behind this slang is so when you’re trading on the phone you don’t mishear billion or million.

Bagholder: It means you’re holding an equity position that’s down a lot – aka you’re stuck holding the bag.

Hawkish, Dovish, Bearish, Bullish: In order, 1) Monetary policy that is meant to tighten economic activity, 2) Monetary policy that is meant to support economic growth, 3) having or showing negative sentiment on the market/a stock, 4) having or showing positive sentiment on the market/a stock.

Don’t burn the midnight oil: “I’m giving you a herculean task, but don’t stay up too late (around midnight or beyond)”

Straight down the Fairway: Refers to a straightforward, seemingly easy situation.

Nose Bleed Leverage: High Leverage (Debt/EBITDA).

Pie in the Sky: An idea or plan that is overly ambitious, unrealistic, or, unlikely to be accomplished.

Sweat Equity: The hard work and labor you have to do to gain equity returns, often by trying to grow a business without taking a salary. SMB buyers or startups often do this. In the real estate world, this can mean doing DIY renovations to increase the real estate’s value.

Long Putt: A risky task/underwrite, similar to attempting a long putt in golf.

Slow Burn: Describes a situation or process that develops gradually over time rather than quickly and often involves patient and steady effort. A deal that takes forever may be a slow burn.

Pole Position: Being in a leading position, you may be in a lead position to win a deal.

Full Court Press: Refers to an all-out and intense effort to achieve a goal. Aka you as a lowly analyst or associate may have to burn the midnight oil to go out and get your deck to your MD ASAP.

Catch a Falling Knife: Trying to buy an asset/credit that is rapidly declining in value, akin to trying to catch a sharp knife (you could cut yourself and hurt your hand). Aka, trying to buy a stock that’s down 20% and continues to slide.

Don't Get Over Your Skis: Advising against getting too far ahead of yourself without proper preparation. Like not preparing effectively for an early read presentation to MDs & Partners.

Lipstick on a Pig: Trying to make something look better on the surface, even though the underlying issues are still there. Such as dressing up a “tech” company as a recurring revenue business when in reality it’s a choppy, ugly business with antiquated tech. Putting lipstick on a pig ain’t gonna make it pretty.

Get Our Ducks in a Row: To get your affairs in order in preparation for a task or project.

Don't Spin Your Wheels: Avoid unproductive or wasteful efforts that don't lead to meaningful progress. Aka don’t spend too long on a deal that should be killed. Unfortunately in finance, this still sometimes means doing a lot of work, and your MD says this, blissfully unaware, that he dumped a lot of work on you.

Can't See the Forest in the Trees: Describes a situation where someone is too focused on small details and fails to see the bigger picture or overall context. It’s when you nitpick one item in a deal or investment and don’t see how that’s less relevant to the story. Your least favorite investment committee member is sure to do this.

Move the Needle: This means making noticeable progress in a particular situation. “Doesn’t move the needle” is the opposite ofc. Could also say “pushing the ball down the field”.

Blocking and Tackling: A football or fishing reference, refers to the basic tasks that need to be done in order to reach the end goal. If you’re managing a portfolio company, you might do a lot of “blocking and tackling” (aka doing two dozen mundane or “how the f*ck do I do this” tasks) to figure things out.

A Lot of Shots on Goal: Describes a strategy involving multiple attempts or opportunities in the hope that some will be successful. VCs take “a lot of shots on goal” and hope they find the next Uber.

In the Penalty Box: Similar to getting penalized in hockey, this means a company shit the bed with earnings and is now not trusted by the street.

Fireside Chat: A casual and informal discussion or conversation, often involving important topics, similar to a relaxed chat by the fireside. A lot of Banking executives have these chats with an internal comms person.

Swing for the Fences: Suggests taking a bold and ambitious approach to achieve a lofty goal, even if it involves high risk (Striking out). VCs swing for the fences with a lot of their deals. They also kinda “throw darts on the board” as well.

Skate to Where the Puck Has Been: Another hockey phrase (these hockey phrases are my favorite tbh), indicating the need to anticipate and position oneself where future opportunities are likely to arise based on current trends.

Back of the envelope: This means doing some quick calculations on a notepad, or in your head. Basically doing some calculations or estimates in a very informal way as opposed to modeling it out in a sophisticated fashion.

Massage these numbers: Change the numbers in the model so it pleases me/the client/IC etc. Probs means your numbers aren’t aggressive (to the upside) enough.

Don’t reinvent the wheel here: Don’t unnecessarily change what we’ve been doing historically/Don’t waste time on a redundant effort trying to fix something that works well enough.

Sharpen our pencils: This means “we’ll get to work on analyzing this deal, and understanding this further.”

Pencils down: This means to stop working on xyz deal until further notice.

Kick the tires: To carefully examine something, conduct diligence before making an ultimate decision.

Open the Kimono or Open Kimono: Basically “open the books”. In finance, this may mean the buyer asking the seller/target company to open the books and share their internal workings as part of the diligence process. People are increasingly finding this phrase to be racist and sexist, so this does not seem like the best phrase to use nowadays. Jamie Dimon caught heat back in 2012 for using the phrase.

Let’s take this offline: Aka – “We’re talking about this during a meeting with a lot of people, let’s get more granular and have a more detailed discussion afterward.” This may also mean the answer you provided your PM/MD was unsatisfactory and he’s not pumped but doesn’t want to go off track in this meeting and will circle back with you later.

Run this up the flag pole: This means passing something up the chain of command (from Analyst to VP to MD or whatever).

Let’s not boil the ocean: This means “let’s not make this insanely hard task even harder”. Think about it – can you “boil the ocean”? No, it’s an impossible task. As usual, finance guys love comparing whatever random and mundane diligence effort they’re working on to the herculean task of trying to boil the ocean.

10,000-foot view: This means providing a description or overview in very simplistic terms, rather than getting super detail-oriented. Think back to Jeremy Irons in Margin Call – “Speak to me like you’d speak to a golden retriever.” In this situation, Jeremy Irons wanted to hear what the problem was from a 10,000-foot view.

Cockroach Motel: This means “if there’s one problem we’ve uncovered, then there’s probably a bunch more.” As everyone who lives in an apartment with regular cockroach issues knows, “if there’s one cockroach, then there’s a bunch more.”

Canary in the coal mine: This is a metaphor for an early warning, but it’s also quite literal. In some coal mines, you’d literally have canaries flying around to snuff out whether there’s carbon monoxide down in the coal mine. If the canaries stop singing, then it means the miners need to gtfo of the mine. Coal miners now use digital detectors instead of canaries, but the metaphor still stands – in finance, a company that’s more discretionary or cyclical reporting weak earnings may be a canary in the coal mine for the broader economy.

Hairy deal, this deal has hair on it: Naturally, “Harry” is a great name for a high-yield oriented account because it alludes to the hair on a lot of high-yield issuers. If a deal has some hair on it, or it’s a hairy deal, it means it’s not a clear-cut deal that you love, it means there are real fundamental issues within the deal that make it a higher hurdle to complete. For example, there may be customer concentration, it might be in a bad industry, it might be highly levered, etc. and those are reasons why you may struggle to invest in a deal.

Picking up pennies in front of a steamroller: This means you’re stretching for yield or returns in a situation where it’s not compelling. You’re trying to pick up a little bit of yield in a very risky situation. That risk/return is out of whack.

We’re involved: We own the bonds, the equity etc.

Hockey Stick Projections: This means you’re looking at projections or growth that look like the shape of a hockey stick, which is probably not a realistic forecast.

Death by 1,000 cuts: “This deal died by 1,000 cuts” – it means there were 1,000 small, different reasons to kill a deal and ultimately after a thousand cuts, the deal died.

Juice is not worth the squeeze: The hard work you’re doing may not be worth the reward at the end. For example, you’re looking at a hairy deal that’s very time-consuming but there’s really not enough yield to get involved. That’s a situation where the juice is not worth the squeeze.

Quarterback the deal: This means you’re “championing a deal” or you’re leading or spearheading a deal. This happens a lot at the Associate/VP level when you find yourself focused on running point with all the internal parties and third parties involved in getting a transaction done. Just don’t let it get to your head Joe Burrow.

Big Swinging Dick: The term BSD comes from Michael Lewis’s Liar’s Poker – the rainmakers at Salomon Brothers, the top bond traders, were called BSDs for their ability to print $$ on the trading floor.

Here’s two baseball analogies below. If you don’t understand baseball, just remember there are 9 innings in a baseball game.

Early innings: “we’re early innings” = we’re in the early days of seeing xyz play out. This is usually a positive thing to hear from a borrower perspective (so long as it’s actually real). The most regular example is “We’re in a fragmented industry. We’re in the early innings of consolidating the industry.” “We’re in the 3rd inning” = “we’re early innings”

Late innings: The opposite of the prior phrase. This means we’re at the end of xyz playing out. For example, the “we’re late innings in the economic cycle” or “we’re late innings on penetrating the domestic market.” 7th inning = late innings.

Donut: “The equity is a donut” = The equity is a zero. Aka, the equity in the capital structure is going to be worth $0.

Cradle to Grave: An annoying deal bro phrase – “I took the deal from cradle to the grave”. This means you sourced/originated the deal, worked on the initial underwrite, and then worked every step of the way through the diligence and closing process to complete the deal.

Loan-To-Own: This describes lenders who enter a credit transaction with the goal of converting their debt to equity. This is a more nefarious and sneaky way to increase your returns, but you don't necessarily want to become a lender who is known for this. Think of it like distressed debt and special sits but for the direct lending folks. Secondly, there’s a tongue-in-cheek way to say this ironically. It’s also a way to make fun of direct lenders who had poor underwriting standards and may be stuck owning a Company after the equity holders get wiped to zero. You’ll start seeing this soon, but those same lenders may just prefer the PE group to maintain ownership because equity ownership may not be in their wheelhouse. They can always amend and pretend.

Amend and Pretend: I expect this to happen a lot in the direct lending market over the medium term. Amend and Extend means when a loan is nearing its maturity date, lenders and the owner will work through a way to extend the loan out (anywhere from a couple of years to several years) and this may involve changing some of the pricing or credit doc terms. “Amend and Pretend” is a cheeky way to poke fun at the fact that some of these MM PE deals might be shitshows, but some lenders may not mind so long as they’re continuing to put capital to work and can maybe get some better terms. Hence, “amend and pretend” – make some amendments and pretend that everything is ah-okay while extending out the deal.

Chapter 22: A Chapter 11 bankruptcy filing is the standard type of bankruptcy you’ll see – but when a firm files twice (11+11) – the borrower is mocked as a Chapter 22.

Chapter 18: This is the same type of thinking as above - a C11 filing followed by a C7 liquidation.

These terms were based on my experience and the submissions I received. Naturally, there are even more classic finance terms out there – but this list covers the bulk of what you need to know!

That’s all for this edition! As a reminder, in order to access 100% of the resources on my newsletter platform, you will need to sign up for an annual plan.

Until next time.

Best,

HYH