Global Credit Rating Agency ---> Backdoor to High Finance
Thesis:
For those unable to break directly into high finance, starting at a one of the "Big 3" (S&P, Moody's, Fitch) is a great entry-level job, in which you can position yourself for a bright future.
Overview:
*Entry-level analysts may only make about $70k (1st year all-in), but work about 45-hours a week max (similar hourly rate to banking)
*Pay/prestige is obviously well below banking, but there is significantly less competition for these positions
*The skill sets are real- financial modeling, deep dive into SEC filings, access to nonpublic information, preparing formal credit memos, meeting with senior management teams, attending industry conferences, investor days, etc.
*If you hustle (CFA track, network with investors / management teams), the exit opportunities can be great (buy side bond investing, banking for structured finance in particular, industry, etc)
About Me:
Started in equity research for boutique investment bank in NYC and moved to a "Big 3" credit rating agency a year ago (not my choice). Currently going down the CFA track, and hoping to make a big move up at some point in 2013. For those readers who may be interested in finding out more about this path, feel free to PM me, and I would be happy to help.
I have mentored some solid kids (and helped them get interviews) and it is actually more competitive than you might think. It is probably less competitive than BB credit risk on the margin (slightly lower paying, but less hours). I personally would pick a CRA job over BB credit risk. For example, at a bank you might just be handling revolving credit facilities or some other niche, but at a CRA you are rating multiple securities such as unsecured bonds, preferred stock, converts, revolving credit facilities ect so there is a great learning opportunity. By understanding bond indentures, covenants ect you are much more valuable to a buyside firm that invests in those particular securities.
Haven't seen PerpetualGrowth in awhile as far as this topic goes, but I can add that thanks to his insight I've joined a Corporates team (non-financial) at a big-3 CRA. The work is very interesting despite some regulatory changes (read: unnecessary, complicated processes). Overall you get a similar experience to ER in that you follow a lead analyst and gain insight into various names from both a top-down and bottom-up perspective. A lot of your work is dependent on what the analyst wants to give you, but the environment is very collegial and there's probably less animosity between Associates Analysts and Analysts since the jobs are more stable than in ER (there's no real performance metric like being ranked in II or being a strong salesman).
As far as getting the most out of your experience, I would recommend choosing an industry/team that is varied and faces a number of credit issues. To find this, go to any of the CRA's sites and filter out by their sectors to see which has the most non-investment grade issuers. Working with non-investment grade issuers is probably more complex and insightful as you see the full spectrum of credit analysis whereas with investment grade (especially for big corporates that don't really change much), the analysis is very standard.
I haven't worked with banks/insurance/other financial corporates or any of the other teams as we're very siloed off, however, I do have a friend in FIG at a competitor and can probably get some insight from him.
A note on exit opps: In the past two months I've seen two people leave -- an Associate Analyst (bottom rung of the totem pole) left for a buyside firm as a research associate, and an Associate Director (2nd level up) went to work in corporate banking. Neither had the CFA charter and were employed for only a few years.
1) I work in structured finance but based on my discussions with corporates guys, you're mostly doing 3 statement modeling and coming up with growth assumptions. I think they project 5 years out. They also do a lot of ratio and industry analysis.
2) in my group, this is very dependent on your team. On my team the structure is very flat, so I'm doing mostly the same things higher lever analysts are doing even though I'm the lowest level. For other groups, including corporates, it may take 5 years before you can be a lead analyst and do your own credit work.
3) again, very dependent on your group. Could be anywhere from 1 to 4 years to go from lowest associate analyst to highest associate analyst, and then 1-3 years to get to analyst.
4) I've seen people move to Asset Management, HF, trading desks, research desks at banks, corporate treasury, etc. it all depends on how you position yourself.