Exit Opps out of a Rating Agency - Structured Finance

Hey AF’er I was wondering if any of you have any input on this – Would working for S&P or Moody’s as an Associate Analyst in Structured Finance group be a good first move out of undergrad? Are there good exit opps? I know rating agency jobs aren’t as intense as IBD or S&T but advice from a few on the street is that it could lead to buy side research, Debt Capital Markets, leveraged finance or structured products… I’d appreciate AF input on this Thanks!

If you are choosing beetween structured finance, IBD, or S&T, then obviously the last two are highly recommended. But, if your options are between structured finance and some fund accountant position, then obviously pick the former. In terms of exit opps…I can’t speak from 1st hand experience, but I can tell you that I’m in NYC as a structured products analyst and am going to try to break into DCM after two years here. (I’m not at a rating agency.)

thanks for the response, I was wondering, is there a reason aside from personal preference for why you’re trying to break into DCM as opposed to an FO structured products group? I thought in terms of salary/bonus at most shops SP>>DCM… but again… I’m not speaking from experience… Also, Assuming one were to work in structured finance for… say 2 years at the rating agency… do you think it would be an organic transition onto a front office desk? So i guess what i’m asking is do you think that there are front office groups that would find this type of experience desirable? Thanks again for your advice!

Why are you so focused on Structured Finance? I work in SF and issuance is down 95% since the credit crisis - there are no jobs and little usage for securitization or related skill sets - plus the regulatory framework will take 3+ years to sort itself out…might want to think about joining a corp entity BTw I worked at Moody’s - making a jump to a “desk” is very rare; to an analyst role more prevalent but understand buy side shops havent been hiring in 3.5 years

to the OP, I want to do DCM because I know a bit more about it and is deal based, which I prefer. I don’t know much about trading SP (I’m assuming you mean trading since DCM is considered FO as well), and I also don’t care for becoming a trader. besides, the experience I’m currently gaining is looking at deal structures, collateral risk, etc. I’m not sure how that would pertain to trading, but I can definitely see the connection to the deal structuring. DMNYC, although issuance is down, it’s not gone and SF isn’t going away. So, if one has a true passion for it and not just chasing the “hot money” (like myself), then why not pursue it? Eventually, I’d like to get deal structuring experience and help emerging market firms when they decide to join the securitization party.

Correct it is not gone, it is only 95% gone… Good luck “deal structuring” when there are basically no deals to structure… Free Fed $ is killing SF as a source of funding as well

“BTw I worked at Moody’s - making a jump to a “desk” is very rare; to an analyst role more prevalent but understand buy side shops havent been hiring in 3.5 years” by analyst role are you referring to buy-side research or something like PE ratings advisory groups? The reason i’m focusing on SF is because I have an opportunity to do it… I’m very interested in SF and I wouldn’t mind doing it for 2-3 years…but I know I wouldn’t want to be there for 10+ years… I want to get a gauge for the potential exit opps before I make any decisions… sjv – thanks for the explanation… makes sense… I have a friend who works in DCM… he describes it as IB pay but trading hours… sounds like a damn good deal to me lol

Issuance is down from 2007 levels but it is starting to pick up and will be a significant jump from last year. I don’t see these products going away. Anyhow can anyone give an indication of exit opps for rating agency SF jobs? I have some experience and my opinion would be exit opps to buyside SF jobs would be a good but not great chance. I’m interested to hear others thoughts?

what would constitute as “buyside SF”? are you referring to exit opps with the PE/HF shops that buy the more speculative SF instruments/tranches? thanks for the responding, your insights are very helpful to those of us that are still learning!

It was more of a general comment that RA experience will at least allow some potential to move into a buyside shop be it a Bank that buys senior CMBS or a Hedge Fund that buys subordinate mezz or CMBS pieces. I don’t think either scenario is farfetched but the Bank would be easier.

I would think buyside would mean any asset manager (pensions, insurances, HF/PE) that buys structured products. Remember that some pensions, endowments, etc have a built in requirement for these products in their investment mandate. Institutional investors are usually the ones buying up classes of auto, credit card, student loan, etc deals when they are initially issued. They’re the demand side of things and the firms doing the securitization are the supply side.

the rating agencies are considered the lowest of the low in the finance industry i dont think a jump straight to buyside is possible

SuperiorReturn Wrote: ------------------------------------------------------- > the rating agencies are considered the lowest of > the low in the finance industry > i dont think a jump straight to buyside is > possible I’m curious as to what you’re basing this on and if this is the prevailing opinion on AF… I find it a little strange because from what I’ve heard it’s a pretty good place to develop/learn the ins and outs of financial research… wouldn’t banks/buy side see value in the fact that they wouldn’t have to train you as intensively?

consider the source dude

I’m new to the forum… I’m not sure what you mean… does SuperiorReturn have a bad rep on AF?

He or she has engaged in a lot of hyperbole recently, such that it’s difficult to take his or her views seriously in my opinion. I’m no expert, but for what it’s worth I’d say that a rating agency is not the best launching pad for a career like you want (and there is something to what SR says about rating agencies, although I think he or she exaggerates), but presumably if your role at an agency allows you to become an expert regarding one or more particular products that should result in some opportunities.

that’s fair… Thanks for your 2 cents… I very much appreciate it.

I have an opp to join a rating agency as well (not structured prods, but more of the traditional corp debt prods within a specific sector) I have <2yrs Ops experience as it stands, and haven’t been having much luck getting into research sell or buyside. I’m thinking this may be my best shot to get some analytical / research experience pertaining to the markets / businesses thoughts?

I think a rating agency is a decent option, especially if coming from ops. I’ve known some that go to top business schools from rating agencies, and even one that went to a rating agency after his Chicago MBA.

njk Wrote: ------------------------------------------------------- > I have an opp to join a rating agency as well (not > structured prods, but more of the traditional corp > debt prods within a specific sector) > > I have <2yrs Ops experience as it stands, and > haven’t been having much luck getting into > research sell or buyside. I’m thinking this may be > my best shot to get some analytical / research > experience pertaining to the markets / businesses > > thoughts? I am in a similar position as you, I would take the opportunity in a heart beat, It is better than what you are currently doing it is also more intellectually stimulating and you have a better chance at developing the analytical skill-set you need in finance then remaining in OPS.