Bonds On Demand
by Lindsay Hayden McCorkle, MBA ‘15 (2/12/14)
Without Week on Wall Street (WOW) sessions, valuations class, or Fixed Income (FI) Intensives to hide behind, the real immersion started with the Bond Case. I think it’s pretty safe to say we were all a little anxious to get our teams and see the kind of assignment we’d be working on for the next week. Rumors from the second year class led all of us to believe there would be no sleep, constant injections of some form of caffeine, and possible fist fights with classmates about the pricing logic behind a mystery company’s bonds. Fortunately, things turned out a lot less like a soap opera and a lot more like any other intensive work project.
While the FI Intensive provided some foundational background, it was definitely more difficult to jump in and learn more practically about the pricing process and the financing composition. The deal we were assigned was Comcast’s acquisition of NBCUniversal, which closed in March 2013. We were instructed to create decks in our assigned teams of 5 with a list of components including a debt maturity schedule, list of sources and uses of financing, and debt leverage comparisons with competitors. The objective was to give a CFO level client some background of debt financing in the media industry by using a recent transaction. This assignment initially seemed a little overwhelming for a few reasons: I had no knowledge of the media industry or Comcast beyond my intimate knowledge of their On Demand menu, and I had no practical background regarding the pricing of corporate bonds or how deal financing is designed.
Given my consulting background, most of the topics we’ve learned so far have often sounded like a foreign language. I can’t overstate how helpful it was to directly apply topics in a case-based format. It was a great stress test of my understanding of debt financing and deal structuring process. I was amazed by how much my classmates knew and how helpful they were, whether it was sitting down with me on a Bloomberg terminal or explaining the process used to find the benchmark bonds.
As we finished our PowerPoint on Sunday night, there were a few lingering concerns about our possible presentation the following afternoon. Presenting to classmates is never the easiest of tasks, but knowing there was also the possibility of questions coming from second year Teaching Assistants and Professor Pascarella, we were all a little concerned. In the end, watching my classmates present and hearing the logic behind their pricing and seeing different presentation styles was an additional, and very helpful, part of the learning process.
I’m looking forward to learning more about other transactions, including the upcoming Leveraged Buyout (LBO) and Mergers and Acquisitions (M&A) cases. I know the cases will become more complex, but I can’t think of a more effective way to prepare for the summer.