How is the Non-Agency CMBS / RMBS Space?

I'm starting fulltime in S&T at a BB (Morgan Stanley, Citi, BoA) this summer and have had good conversations with the Non-Agency MBS desks, RMBS in particular (big macro guy and to my understanding RMBS is a little more rates oriented). Just interested to hear this community's thoughts on the space from a career trajectory, compensation, sustainability (at risk of being downsized), etc. perspective. To my knowledge, the BB is a strong player in the space.

For bonus points, interested in hearing about major metrics to be paying attention to, primary things to know ahead of the more technical interviews, etc.

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Comments (10)

  • Analyst 1 in HF - Other
Jun 22, 2021 - 5:03pm

I work in the space (buy-side) and in general find it pretty interesting. There is a lot of different routes you can go in terms of products, type of firm (BB, HF, Large Asset Manager), role in the field (trading, sales, banking, structuring, syndicate). From a product perspective, there is CRT/Jumbo which are more rate sensitive and closer to Agency MBS, or RPL/NPL, NonQM, Expanded Prime, etc which are more credit sensitive and closer compared to corporate bond land. 

Feel free to ask any questions you might have on the space.

Jun 22, 2021 - 5:36pm

Are you more on the nonagency credit side or agency MBS side? or a generalist? 

  • Analyst 1 in S&T - Other
Jun 28, 2021 - 1:27pm

Would you say compared to some other roles (equities is the low-hanging fruit, but even some sects of FI like vanilla rates) in S&T there's a decent and sustainable niche to be carved out? I find MBS to be super interesting but want to ensure I'm setting myself up for a long and potentially fruitful career. 

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  • VP in S&T - FI
Jun 29, 2021 - 1:29am

In all honestly nobody really knows what is sustainable.  In 2005 guys who were trading CDOs thought it they were "safe" but we all know how that turned out.  If anybody really understood the pace and application in of technology to the S&T world then they would be sitting at a VC betting on the companies that are making or it creating it themselves.  If you like a product and think its interesting go for it b/c who the hell knows what is coming next.  Part of the fun of S&T is the fact that you never know where your career will take you and if you look at the guys who stick many have worn a lot of different hats over their careers.  Personally I think MBS is only going to get more interesting if we continue to see the agencies back away from the market, but I think the days of pay-option ARMs and people with sub 600 FICOs getting mortgages are never coming back.    

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  • Incoming Analyst in IB - Gen
Jul 4, 2021 - 12:07am

As someone who isn't sure if they want to stay in S&T forever (or beyond 3 years), how transferable is the knowledge from trading MBS (and other securitized products) to a CLO issuer or big Real Estate shop/HF arm (Bx, Brookfield, KKR)

  • VP in S&T - FI
Jul 5, 2021 - 11:14am

Its decently transferable, those type of places tend to like securitized product bankers/research better for their more junior roles but there are plenty of sell-side traders who work at those type of places but generally after spending some time at another asset manager (PIMCO, Blackrock, etc.).  All that being said it really comes down to networking, you will be trading with all those places a good bit so you will know them well.      

  • Incoming Analyst in IB - Gen
Jul 5, 2021 - 11:55am

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