credit rating analyst vs fixed income analyst
Can anyone put some light on how this 2 differ?
Which one is considered higher tier?
My objective is to become fixed income PM
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Rating agencies are paid by the borrowers to provide a credit rating on their debt. Rating agencies conduct a qualitative and quantitative analysis on the borrower and compare them to other competitors to determine the likelihood of default. What rating agencies do not do is provide any recommendations like buy or sell this bond at this price. Rating agency analysts are usually divided up by sector similar to equity research analysts. You’ll have 2-3 analysts covering an entire sector and listening to earnings calls and asking management questions about financial performance and the company’s strategy, etc.
Fixed income analysts conduct similar credit analysis to rating agencies. They will also cover specific sectors as they are assigned. Probably around 20-30 different names depending on the sector. They typically would monitor those names and identify opportunities where the team can make money by buying or selling debt. They’ll do their research and then make a recommendation to their PM with a well written and thought out analysis.
Ah i see.. So FI analyst is one step up from Credit rating analyst..
So if i my conclude:
Best: 1st job FI analyst, then junior FI PM
2nd best: 1st job is credit rating analyst, then move to FI analyst, then to Junior FI PM
Thanks!
I would go FI Analyst if you want to be a FI PM. In addition to learning the credit analysis, you'll get exposed to the trading and portfolio construction of a fund. It's one thing ID a good credit for a portfolio. It's another to understand how, when, how much of it becomes part of the portfolio. Is leverage used?
Ah, thanks. Will prioritise FI analyst over Credit rating analyst then.
Just for others out there, working at a Ratings Agency really isn’t a terrible job starting out, quite a few of the Analysts at my firm started there before transitioning and my previous PM started there too, so please don’t turn down an offer at a Ratings Agency just because it isn’t “prestigious” enough.
Thanks! Will keep in mind. Actually rating analyst is what seems reachable for me right now so might start off from here.
The problem is the rating company within reach is really small, only 5 people in linkedin, the head is a CFA charterholder but the rest is not
Bottom line is both require solid credit skills. FI analyst has an extra job to figure out securities pricing, so the work is a bit more markets oriented than ratings.
In addition, ratings analyst gets paid by fee, and FI analyst somewhat takes on a bit of market risk and hence more upside in terms of comps.
Ah, got it very clear, thank you
Credit/fixed income research is quite different from credit rating .. would say credit investment research requires a more wide understanding of markets and investing due to the nature of the seat (being at an AM firm vs ratings agency)
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