9Questions is our Q&A series featuring key decision-makers in the corporate credit markets — get in touch if you know who we should be talking to!

James Brown is head of leveraged finance & project finance syndicate at Lloyds, where he leads deals across high yield, loans and more. He previously worked at Mizuho, Morgan Stanley and Deutsche Bank, as well as on the buyside at Citadel.

Brown talks with 9fin on private credit partnerships, the sterling TLB market and the history podcast that keeps him (and us!) occupied. 

1. You started your career as a chartered accountant before moving into Deloitte’s corporate finance team. How did those experiences prepare you for your current role?

It was a great way to develop an understanding of the fundamentals of businesses across multiple sectors. Spending time with management teams and really interrogating the numbers and strategies has been an absolutely essential part of every role I’ve had since then, but the groundwork for that was laid working in this environment.

2. You joined Citadel years later, part of a fundamental long-short credit strategy. What did that experience on the buyside teach you, especially around the global financial crisis?

The strategy was market neutral, relative value and I oversaw a multitude of sectors from cap goods to transportation. The direct impact of the financial crisis on company financials was one thing, but the systemic withdrawal of liquidity and leverage was the real challenge for any actively traded portfolio with weighting towards loans and junior capital instruments. When the asset bid evaporates, managing risk becomes very challenging in a mark-to-market environment. Being alive to potential liquidity vacuums feels pretty key to any underwriting role.

3. Now to your current role, what excites you about the opportunity at Lloyds?

A lot. The bank is well positioned in certain core markets and has a great opportunity to pursue growth in related areas. In my current role, I spend a lot of time working with the teams in leveraged finance and infrastructure, where we see somewhat different funding cycles in play.

In infrastructure, the bank is strong in the UK and, in line with our wider strategy, has made great strides in growing our presence in the US market. We can see there is big potential for multi-year tailwinds in this space, given the required investment in areas such as digital and renewables infrastructure, and the need for a continued evolution of funding sources beyond bank liquidity.

In the leveraged finance space, Lloyds covers the full spectrum of borrowers, from mid-market through to large-cap borrowers, and has relationships with a broad cross section of management teams and sponsors. The interplay across these markets and the breadth of required financing solutions, from bank lending to private credit to the institutional market, creates a wide range of opportunities for us to help and add value for our clients — both with bank capital and through bringing partner capital alongside.

4. You’ve mentioned opportunities to increase partnerships too — are bank-private credit partnerships an example of this?

Partnerships are a focus at Lloyds, but we are not alone in that. Being able to originate opportunities through the bank’s vast network of corporate and sponsor relationships is a real enabler of strategies where we seek to combine our own lending appetite with that of institutional investors to better serve clients. The private credit partnership established between Lloyds and Oaktree last year is a great example of this, but we see opportunities across multiple market segments, be that real estate, infrastructure and other leveraged products. Ultimately, it’s about offering a better solution to clients through expanding access to capital.

5. Can you explain how Lloyds supports clients within its infrastructure & project finance team, and why that’s not covered by your usual LevFin team?

The markets have historically been quite separate, but we see continued evolution and increasing overlap. If we look at the large-cap LevFin space, there’s a high degree of product homogeneity, be that in TLBs or high yield, and ultimately the markets are deemed liquid with relative value and arbitrage targeted by institutional investors. Infrastructure has a far higher bank presence, and inherently more stability, but there is a lot of variety in terms of the risks — like construction, offtake, duration — and the financing structures that result. Having the in-depth expertise and understanding of what will and won’t work across both markets its critical.

6. How do you see the outlook for sterling TLB markets — are you still seeing very strong competition from private credit, for example?

In reality, there is a finite number of size buyers for sterling TLBs and there isn’t the same dynamic that we see for euro paper within the CLO complex. The yield differentials for sterling can look attractive to private credit where there is currency flexibility so there is frequently overlap, especially if size is required. Ultimately, if we are placing a sterling TLB we are probably having conversations with many of the same investors that would also have appetite for a private credit solution in some form. In terms of outlook, we feel pretty good that where borrowers have a need for sterling, there will demand, subject to terms.

7. How are issuers navigating the LevFin market given so much uncertainty, especially politically?

While volatility may have increased significantly, it’s too early to define outcomes, but I think issuers have learned from the dislocations we’ve seen in recent years. Maturities are generally extended well in advance and borrowers have ensured they have committed liquidity access through RCFs to manage periods of uncertainty. Planning for multi-year issuance strategies and preparing well in advance seems inherently sensible. Also being alive to all avenues for market access — public or private and exploring cross-currency options with the support of banks maximises optionality.

8. How has the origination process evolved during your career?

In some ways it’s probably simplified, given increased product homogeneity, but it’s an incredibly competitive market where banks must earn the right to win mandates.  Being relevant to and supportive of clients on a consistent basis and ensuring you are proactive in finding solutions to meet their liquidity and risk management needs remain essential prerequisites.

9. We see you did History & Politics at university. Is that still an interest of yours? We’ve got many loyal "The Rest Is History" podcast listeners at 9fin...

Honestly it’s of even more interest now than it was at university, and I’ll admit to being a huge “The Rest is History” and “We Have Ways of Making You Talk” fan, in between tuning into rugby podcasts to hear about the continued success of Bath RFC…

Check out our full collection of 9Questions interviews here.