Dear friends, I'm preparing for an interview in credit sales and trading and was wondering what do people do in this business. I have two years' experience as a CDO manager and alternative credit investment advisor. According to the headhunter, the position I'm about to interview will focus on structured products and high yield. In the pre interview, they asked if I have worked on a credit trading desk before, and I said no. My past experience was about searching for alternative credit opportunities (like special financing, high yields and some stuff with more complicated transaction structure, mostly in a fixed income fashion) and pitch the idea to PM and clients, recently I became the point person in CDO equity tranche investment research in the group.
Honestly speaking, I've never learned what the folks do in credit s&t, I'd really appreciate if someone can give me an overview of credit s&t. What do they do? What are the typical interview questions? And what are the exit opportunities?
Thanks a lot!
Hey HoggieT, I'm the WSO Monkey Bot...do any of these help:
Calling relevant professionals! Rajgo94 Port Ricky gmoney99
Fingers crossed that one of those helps you.
Credit S&T Question (Originally Posted: 10/09/2013)
If a client wants to buy a certain number of corporate bonds from you and you have none in your inventory/book, where do you get the bonds from, given that the market is OTC? Will you call other banks to see if they have any? What if they don't have any either (i.e., it's some highly illiquid bond). Do you just tell the client you can't fill the order due to lack of liquidity?
Thank you
bump, let me know if I should clarify something.. I'm basically wondering how bond market making works (or market making for any decentralized OTC product) as opposed to, say, market making for stocks, which trade on a centralized exchange. why don't they make an exchange for bonds and other OTC products for that matter?
extremely curious, thanks for the insight
For decentralized products you have interdealer brokers who act as hubs...
Market making you don't fill orders. You take the counterpart of the trade. You would keep the position or a part of the position, you can trade the other way using inter dealer brokers and you can hedge using other products. The more illiquid the more risky (there are other factors involved, obviously) hence the client gets a worse price.
If you don't own a bond and someone lifts your offer (buy from you) then you are short selling the bond. It's the same idea as stocks... There is a cost to borrow it and sometimes it's very hard to find a borrow.
Putting things on exchanges is the worst thing imaginable in finance if you are not a customer. Why the hell would you want transparency if you are on the sell side?
You post the bid on your firms internal network, and see if another broker at the bank has a counterpart for the trade. If not you can reach out to other broker/dealers, but most likely they will not be able to give you an offer good enough for your client, since he probably already talks to that broker/dealer and has his offer, without the spread you are putting on it.
If you have a trader he should (if he´s good) know if anyone is selling the bonds and be able to call that client up and give you an offer.
If no one is selling the bank could sell the bonds short, but that is risky in less liquid assets. If you don´t find an offer you simply tell the client there currently isn´t an offer in the market. Getting a firm bid from the client will however allow you to to be hit as soon as there is a seller in the market.
Consectetur ipsum modi qui aut numquam. Et earum maiores corrupti deleniti. Sint et rem dignissimos enim. Non quidem exercitationem quos.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...