Exit opps for Structured Finance/Securitization?
Wondering what exit opps are possible and places to go from a structuring role in a Securitised Products Team in a IB.
Does anyone also have any experience or is it viable to lateral from the Securitised Products Team to the LevFin team or Restructuring?
As a securitized products banker, this is a little bit of an odd question. Securitized products is basically completely unrelated to either of those things, so I would not describe them as typical "exit opportunities."
In my experience, securitized products does not have the similar two-years-and-out pattern that you get with "regular" IB, so "exit opportunities" are not quite as much of a focus, though you can absolutely get jobs on the buyside (focused on securitized products) or at an issuer if you want.
A lot of us end up staying because of the hours aren't terrible and the work is pretty interesting/niche (can be very quanty if you're into it, or softer/client-facing if not).
Just a question, do you cover all asset classes or just RMBS or CLOs etc. Also from a structurer stand point is it easy to switch asset classes from RMBS to CLOs for example?
Bankers/traders are generally focused on one type of asset class (I only cover RMBS), though there can occasionally be some blurred lines depending on exactly what you cover. For example, though I am an RMBS banker, some of our clients do small-multifamily or CRE-like loans which we cover.
Structurers tend to not be as focused on a single asset class, though I imagine that could depend somewhat on the bank. That being said, I do think that they have focus-areas, as I tend to work with certain structurers more than others.
What is the WLB like for securitized products bankers/structurers? Also how 'quantitative' is the structurer role compared to that of a banker?
How is comp at the junior level for a securitization banker? Similar to that of coverage or more traditional product groups?
Just saw a second year analyst move to PE. Not a big fund or one you've heard of but they switched. They were also at a BB known for sec prod.
Stay for the good WL balance and decent comp, you can leave for debt funds. We've been seeing a pivot of sell side services to more traditional buy side outfits (think CS offloading their securitized products group to Apollo).
I've seen bankers go to issuer side aka startups as well as buy side.
I agree the WL balance and the actual work is very interesting, just wondering if there's a lower comp ceiling compared to other groups/buy side.
Also what are some of the big buy side names that would take securitisation bankers? - Apollo, Centerbridge? KKR?
Apollo yes, I've seen
Basically anywhere that has any sort of credit/debt strategy...places that come to mind are Angelo Gordon, Apollo, Ares, Blackstone, Cerberus, Lone Star/Hudson, Starwood, etc. plus a bunch of other places that are probably less "name brand" outside of the securitized space, but are large within it.
Again, the up-and-out/buyside-or-die mentality is less prevalent in this space, but you can definitely go that direction if you want.
Do you know the reason behind why there's an increase of these groups being offloaded to the buy side?
Punitive bank capital requirements post-GFC have made banks less efficient holders (or even intermediaries) of the risk on the margins.
Meanwhile, PE firms have been buying insurance companies and now have a ton of stable, long-dated capital to deploy into IG or near-IG assets. The securitized space is uniquely well positioned to fill this role because it tends to be more complex and less liquid that comparably-rated corporate credit.
If you have the ability to understand and structure the sort of niche/idiosyncratic types of assets in the securitized space, and you're not as constrained by need for liquidity (which insurance arms of PE firms aren't), you can make a decent excess return.
If you look up Apollo's 2021 investor day presentation, it outlines the thesis (which they're especially bullish on) pretty well.
I can guarantee you WL balance at Apollo will not be great lol
But regarding credit-fund exits, wont the lack of 3FS modelling hurt? or would you say the cash-flow modelling is sufficient for debt-fund purposes?
Likelihood is that you'll go into a Structured Credit type hedge fund or something Specialty Lending type, unlikely you'll move from SC->DL or Restructuring for example.
Is it possible to move directly into securitized products/abs trading? Or vice versa - possible to move from abs trading to securitized products banking?
Absolutely doable, particularly at the junior level. In fact, analysts at my bank are not really "committed" to one or the other until the ~second year I think.
Obviously, as time goes on, the skillsets tend to diverge a bit so it becomes less common. But no reason to think a quantitatively-oriented banker couldn't pivot to trading if the right need/fit came along.
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