Mobility between equities and debt?
How much mobility is there between working in public equity and public debt? For example, if you do a 2-3 year RA program in equities, how hard would it be to move to HY debt?
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Intern in IB-M&A, sorry about the lack of response. Maybe one of these topics will help:
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If those topics were completely useless, don't blame me, blame my programmers...
Bump.
I had the same question. I'm going to start in IG credit but would like to venture into riskier debt and equities eventually. A distressed or global macro shop.
I did an internship in a distressed credit hedge fund which invested across the cap structure, sectors, regions. I would like to do something similar in the future.
I think it's doable, but it's always an uphill climb against competitors who have more relevant experience in the asset class you want to switch into. So you need to overcome 1) why the change? 2) do you know the new asset class better than competing candidates.
From hiring firm perspective, they just want the best candidate - they don't care you are trying to make a switch. Think about it from your vantage point: if your equity firm wants to hire another headcount, would they prefer someone who has covered equity or HY debt?
I think Credit to Equity is easier than vice versa. While narrow-minded credit focus can certainly create some issues as you become too downside focused and unable to evaluate upside, a good credit analyst is a good business analyst and can value a business which is what equity analysts do. You may have to learn a bit of positioning and technicals that are specific to equities, but it is not that complicated. I do think it is a greater challenge to become a Growth Equity analyst (unless you have uncommon sector expertise in a growth sector), but Value Equity / Special Situation styles should have a lot of skill overlaps.
An Equity analyst coming to Credit will be immediately challenged with material gaps in skill set. They will not have read credit agreements or indentures in any meaningful detail. They will not have been in the habit of thinking about capital structures in terms of nuances in seniorities and guarantees. They will not be familiar with bond math and what drives risk and returns in a bond (hint: it’s not yield). They will not have an instinctive grasp on whether a bond is rich or cheap on a relative value basis (e.g. if I told you here is a 7x levered Packaging LBO 2nd lien bond maturing in 5 years with CCC ratings that is trading at ~8%, do you have an immediate feel for if that is a long or short without further information? What is the next question you would ask?). The reverse is not true as Credit analysts think about Enterprise Value multiples and FCF yields all the time for different sectors and different business qualities.
Source: Obviously unbiased credit analyst
Yeah but credit analysts / PMs make less vs equity though on average
Not true, FI PM's cover a lot more money compared to EQ PM's which make up most of the time for comp differences.
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