DCM: Debt Capital Markets
The debt capital markets (DCM) department acts as an intermediary between issuers of public or private debt and market investors. In simple terms, it helps governments and companies to borrow money in the form of tradeable securities at the best possible terms.
The types of intermediated transactions include senior or subordinated bond issues, as well as private placements of debt which can take the form of bonds or loans (EuroPP, Schulschein, USPP, etc.). Bonds may be classified as investment grade (for issuers with the highest credit ratings) or high yield (for lower quality issuers). They can be denominated in euros or in another currency such as the US dollar.
Debt Capital Markets bankers generally specialize according to the nature of the clients they serve, namely corporates, financial institutions or public entities (also known as sovereigns). The DCM department includes origination and syndication teams, which assist issuers in structuring their transactions, pricing, choosing the timing of the issue, drafting transaction documentation, and preparing any necessary market disclosures. The department also works with the rating advisory teams, who are responsible for advising issuers who wish to have their debt rated by Standard & Poor's, Moody's, Fitch or another agency. Finally, it relies on market operators to market the transactions.