London-based high-yield bankers are bracing for a slew of layoffs from European investment banks after the recent spurt of debt restructuring is--successfully or unsuccessfully--completed, according to BW sister publication TeleTech Financing Week. Bankers declined to name banks that they thought would spearhead this trend.
Many of the telecom issuers' high-yield bonds were trading at below 50 cents on the dollar. So, high-yield bankers are focusing on aiding telecom companies, such as NTL and Netia, to pay back the debt, or restructuring debt portfolios accrued in the past few years with looming bankruptcy and default. This scenario has shrunk the investor base for telecom high yield, which in turn shrinks the demand for bankers with such expertise. "The investor base is not there," said one junk bond banker.
Bankers did not venture to guess just when banks would begin to cut back on their high yield teams specifically, taking into account that many debt restructuring deals take a long time to complete, and that a number of investment banks had been paring staffs in general already.
At present, Netia is in the process of negotiating a debt-for-equity swap for $850 million in defaulted notes. NTL still owes bondholders some $16 billion and is reviewing its options.