Credit research to equity research
I have just joined as a credit research analyst. Will it be difficult for me to shift to equity research (buy/sell)?
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Would like to hear others thoughts as well but my thinking would be if you’re in a sell-side credit role it would not be too challenging to move into sell-side equity. You’re looking at things from two completely different angles but you’re still developing those analytical and research skills.
With that said, I would think moving into a buy-side equity role would be more challenging. Just because those are usually more highly sought after and difficult to obtain.
So what according to you should be my further course of action ? I'm starting out as a credit analyst in a credit rating agency.
Ok so that changes things a bit, because I’m assuming you’re not going to really be involved with an investment process, but more looking at credit profiles to justify your agencies rating. I think you’ll still develop good analytical skills, and if you really want to do Equity research I would start taking CFA exams and try and get a few of those under your belt. Once you’ve finished a few, then I’d start really networking with alumni and try to make the move.
Another option is spend a year or so in the rating agency then try and move to true sell-side credit research at a BB then try to move to some form of equity research after that. Regardless showing you can pass CFA exams will help your transition wherever you go within asset management.
If your bank / boutique internally has ER, that be your best bet. Otherwise, I think networking to other bank's ER is totally doable. Then it boils down to:
Otherwise, pretty doable.
Hey thanks for the reply. Yes you can say junior in the sense I'm just starting off my career and this is my first job. Actually I researched quite a lot and I read somewhere that it is difficult to shift from credit. I'm looking at getting into investment banking/Private equity/ M&A down the line after some years and from my limited knowledge I felt I would have a better chance of doing that through an equity profile than credit. Please tell me if I'm wrong and also if you think I should choose a different path (like staying in credit) as I'm just starting out.
I can't speak to lateraling from research to IB/PE/M&A, most go the opposite direction but I know people who have done what you hope to accomplish.
Many banks have their own ratings teams that replicate what the ratings agencies do for prospective issuers. I would try to get to know as many of those guys as possible, it’s a logical next step but probably one many of your peers are pursuing.
The credit markets are many fold bigger than the equity markets. If you just want to do something IB/deal related, you have a much better shot staying on the credit side. Going from a ratings group to lev fin seems like a natural move, and going PE from there is very doable. ER is much further away from M&A and PE than the lev fin teams that finance the deals.
That was pretty insightful for a beginner like me ! Much thanks Antikobe !! But if debt market is wider as compared to equity, then why is everyone chasing equity roles more than debt ? Also if I do pursue equity then what trajectory could I follow ?
Equity is generally thought to be sexier. In debt you really look only at the downside so in a transaction you need some people who can see what the upside would be. I would argue you need people that understand capital structure and risk just as much if not more.
If you pursue equity I would try to connect to as many groups that are in the same industry (broadly, like industrials/healthcare/tech) as you can and talk up how you always wanted to analyze those types of companies.
Does the outlook look more positive for credit market roles?
In what context? That’s a very broad question. Do you have roles you are contemplating?
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