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a booming industry. Try commercial real estate CDOs
what are the bonuses like for senior guys?
exit opps?
Seriously, I would guess not that good. More securitization? trading ? Maybe some specialized HF that invest in the riskier tranches ? You develop a very specialized skill-set that is nowhere near as transferable as the one you would acquire in IB.
I'm not saying it's bad though. The work is very specialized and complex so my understanding is the expertise you acquire would make you very valuable if you'd want to continue in that area. Just my 0.02.
well there is huge growth in the credit derivative market and Im sure those guys get paid well. the downside is that you do become specialized into an area pretty early in your career. there are only so many places that utilize those products so you are limited. on the same note you can make the argument that since you deal with more complex products that you would be able to pick up the skills needed very quickly.
securitization is pretty wide - are we talking receivables, CDOs, etc.... not very complex on the receivables side for sure. pretty mundane.
What are 2007 analysts getting offers for?
Depending on the type of asset being securitized, you may learn skills that are valuable to specialized hedge funds. I know people who went from securitization/structured finance into everything from infrastucture hedge funds to CDO trading shops. But certainly the skill set is very specialized and narrow. Like being a brain surgeon instead of a general practitioner, this is not a bad thing, but it is narrower.
infrastructure finance is the next tech. Who are the hedge funds that are playing?
Thank you all for the insight. It helps a lot. I guess I don't mind being too specialized only because I don't know what I'll be doing in a few years from now. Thanks again.
anyone know what bonuses are like for securitization bankers..? or that depends on the product group you are in?
It's pretty mundane work from what I hear, looking at peoples' or corporation's mortgages. If you're considering investment banking versus securitization, definitely do investment banking. Banking is at least theoretically interesting (working with prominent companies on a wide breadth of financial transactions) whereas securitization is looking at Sally and Joe's home mortgage and determining whether you want it in your CDO, CMBS vehicle, etc.
Most of the people I know who are in securitization either progressed in their securitization group or had to go to business school to change careers. Securitization is also not nearly as prestigious an area to be in as banking or sales/trading.
If you're going to do securitization, I would make absolutely sure that you know what the work entails and that it interests you. I haven't spoken to very many people who find it interesting (myself included).
Bonus-wise, your bonus should be similar to banking at the analyst level. Not sure about bonuses at the higher levels.
you currently in securitization? I'm not worried about the exit opps at this particular bank. Apparently lateral movement is pretty easy and I've known a few analysts who moved from securitization to i-banking after their first two years without losing the 3rd year analyst status.
I think it's something that interests me,and I plan on going to b-school anyway. So I guess we'll see.
Nope, I'm just a senior in college doing banking next year haha. I did an internship in banking, but wanted to research other areas to ensure that banking really was the best place to be before I went to banking full-time. I have a friend who did an internship in securitization, and another friend who's a second year analyst in securitization. So I talked to both of them, and also interviewed for 1 securitization job. So take my opinion for what it's worth, but needless to say, I'm going back to banking.
Also, every bank says lateral movement is really easy. But quite frankly, from what I hear from friends in the industry, lateral movemement is incredibly difficult at pretty much every bank on the street - it requires that you go through mutliple rounds of formal interviews with the group of your interest (it's there's even a spot available in that group). It's obviously not that hard to move within your division (i.e. from the healthcare banking group to the TMT banking group) after 2 years, but moving cross-divisionally is supposed to be quite difficult.
If you know of 2 people who moved successfully, try and find out how many people actually WANTED to move in that year. I have a feeling it's a bit more than 2 lol.
Also, never take a job planning to switch divisions.
If you don't mind me asking, what offers are you considering? Are you considering securitization exclusively?
That's true. No, i was looking at general ibanking, but I don't really like the other offers I have in investment banking. I like this specific bank a lot better than the others..which is why I even considered this area. Plus, I really liked the people I met during the interviews in this division.
I did an internship in Sales but didnt' like it at all, but oddly became interested in CMO trading/structuring. I'm weird like that though..>.
Securitization is for those who like real estate or stuff backed by some asset. Mortgages are one aspect, and differ vastly between residential and commerical. It really comes down to what type of asset you are securitizing, be it car loans, receivables, etc. Work also defers on which aspect of the deal you are working on, origination, underwriting, or structuring.
If you venture into securitization, you gain a specialized skilled set, with little mobility later on. Most of my buddies that started in securitization are still in it, but have moved around in the deal process, like trustee to structuring.
General ibanking will give you more exit opps. Securitization hours vary by bank to bank, but tend to be better than general banking hours by a little bit. Pay is very similar to general ibanking, but not sure on bonuses.
Deal flow looks good overall, because of strong issuance. But will come down to which aspect, like RMBS looks like its tapering off a little. CMBS issuance is strong globally. CDO issuance is on the rise.
I'd also emphasize that if you're looking into securitization thinking that it will be easy to move to another group I'd at least make sure to confirm that is the case at your bank. I thought about securitization and what turned me off was that after talking to people it sounded like moving around would be pretty difficult without going back to business school..and exit opps might be suboptimal as well. All of the people I talked to were at one bank (Citi), though, so take that for what it's worth.
Yeah, a few of the interviewers I spoke to and two alums from my school all transferred in and out of the division. (ibanking to securitization and then securitization to ibanking). So i'm not worried about that. Moreover, I'm planning on going to business school so either way I'll get out of it eventually. haha.
*
curious to know which product and bank you are moving into.
ill be in CDO at large BB.
from speaking with other higher ups, securitzation is better than banking, bc they don't require you to get an MBA to move to associate level.
better hours: 70-80
on the trading desk. ie. potential to move to FI trading or Structured trading.
difference in skill set: in IBD you learn about companies and valuation. in Strutured you learn about default/prepayment analysis and statstical analyst (HUGE exit potential for trading or Stats Heavy hedge fund).
again agree with people who said that RMBS and CMS are slowing and CDO are blowing up (thank god!).
I have no idea what product i'll be doing. I think i'm going into a generalist pool first, and after training I'll be placed. But I'll also be at large BB.
I'm pretty psyched about Securitization Banking. I spoke to a VP who does more of the banking side of securitization versus the structuring side, so I think I'll at least grab some basic knowledge in that area. And, i know if it doesn't work out, I can move to straight IBD (if i wanted to). I wish I had a much better idea of what I'm doing..but I don't. haha. the name is just sexy..
I'm surprised to hear RMBS is slowing, although it is a pretty cyclical business. Probably 4 or 5 years from now, it'll start to speed up again. From what I hear, RMBS esp. is blowing up in China and other Asian countries, especially CMOs and such. We'll see I guess. But thanks for the insight! I'll make sure I try to get into CDOs...
I just got an offer to move to the CRE division of my BB. I'm moving to NYC to work with CRE CDOs, which are blowing up. This stuff is interesting and the exit opps are great if you want to go into Investment Management. Exit ops for traditional banking= PE. This way, I get the banking experience while at the same time modeling CDOs and can work for a hedge fund or Asset Management co in the future.
in case any other people had insight..
you will NOT be looking at individual mortgages.....that is a very incorrrect statement!
I work in the industry and we get paid the same as IB. It's a very quantitative field whether it's originiation, CDO trading, CMO's- and that's why we get paid a lot. I agree that it's a little more specialized, but at the same time you have a job that not everyone can do!
If you are on the structuring side, you are looking into complex deals involving many deriviative products. In my first year, I learned a great deal about 5 -6 different products. There's a lot of thought behind the product and it's not just one boring pitchbook after another.
I've seen exit opps at hedge funds as well...
The 'securitization transaction team' is not securitization banking, but rather securitization accounting right?
I'm assuming securitization banking refers to an area within the banks that is neither IBD, S&T, or Reasearch. Please tell me if I'm wrong.
Trustee side of CDO is a great place to make contacts since clients are mostly hf's. it is specialized, but depending on where you go, make sure the training is substantial and that your excel skills are sharp. hours are much better (60-75 pw). specialization can mean marketability. Also the valuation techniques you learn help in b-school.
I agree with what nyc9982 said above--the whole securitization/structured finance industry is very interesting and challenging, and though you are specialized that's what's valuable nowadays anyway. You may not have a thousand different opps, but you'll have 5-10 great ones. The pay is excellent and the hours are far better.
I'm excited.
Next question- what group should I try to get into (i.e. what will be a hot and interesting product in the next two or three years?). I want to identify that and pursue the group before I get there. I heard the MBS group was really nice at my bank ( great people, fantastic hours, no weekends, good bonus) but I also want an area where I will learn alot and gain a valuable skill set..? Someone mentioned CDO's..
CDO's a good place to be. new products are always gonna come out. emerging markets have messed up politics and too many issues with squatting, ownerships, land reform etc. for MBS to grow out there. CDO's have grown in the last five years from 500B to 1.5Trillion, and it is projected for steady growth, but not quite the levels it has this past few years. Credit as opposed to Bank Loans has more room to grow plus with China raising reserve ratio, cos and banks out there are highly discouraged from engaging in balance sheet cdo's.
What do people think about Merrill's Structured Finance Group?
funny to see a thread on structured finance, as i've got an interview with the structured finance group at Standard & Poors (CDOs)...
anyone have any opinion on being a structured finance analyst at a rating agency like S&P? exit opps to Asset Management?
exit opps are actually pretty good since as an analyst you get exposed to all sides(ibankers, investors, accountents, etc.) Plus training is good, atleast at moody's don't know about s&p
does it make sense to get into ibanking securitization and move on to equity research?
No bmwhype, completely different jobs/knowledge. Both good careers but relatively unrelated.
bump
bmwhype - unless i'm missing something, securitization to equity research isn't the smoothest transition. they are pretty unrelated... why do you ask?
Ha, ur responding on a 3.5 yr old structured finance thread? R u serious?
Seriously, WTF.
Sorry guys, I was searching the forums for Securitization posts and didn't notice the date.
It's interesting to read my posts from four years ago. Ah, what a jaded, naive college student I was.
yes. Thank GOD the banks, funds, insurance co's, and other investors of the world piled into CDOs back then!
^ditto...hahaha when i started reading this I thought the entire thread was sarcastic...untill I noticed the date Ms Serendipity did you end up going into struct. finance? Just curious how it worked out if you did
I went into finance that was structured (project finance). By the time I got into banking ('07), subprime was already blowing up and no one really knew that the other structured products (asset backed securities, CDOs, etc.) were going the same way as well. I stayed far far away from that and it worked out pretty well for me. Most of the people I knew who went into those spaces are either 1) unemployed or 2) doing something completely different (both in and out of finance).
securitization banking (abs/mbs/covered bnds/...) (Originally Posted: 02/16/2011)
i m very interested in the whole securitization business and i ve read through this forum's posts and also talked to some people that have (only) second-hand info about these topics.
is there anybody on wso with experience in the banking side of securitization willing to give some insights? what exactly does an analyst do in these groups? i understand hours/lifestyle is much better than m&a? are there significant exit opps?marketleaders (in europe)?
thanks so much!
Depends, are you based in the U.S. or U.K...definitely not the same as traditional banking and limited exit opps
One exit op is to manage portfolios of structured finance assets at various types of buyside shops. Depending on the type of securitization you work with you can get a decent amount of experience analyzing the underlying assets, too.
it would be uk...and plain vanilla securitization (at bb)
nobody?
I'm rotating through securitisation at a BB in Australia. I've started off just learning about the markets and the specifics of securitisation (warehousing, credit enhancement, waterfall payments, bullet payments etc. - lots of jargon). Some other stuff I've been up to: listening in on conference calls for upcoming deals, helping out with pitchbooks, monitoring ratings agencies, bloomberg and our research from US and Europe offices for new issuances and changes in spreads. Only been at it for a few weeks. Sorry I can't provide much more info.
Hours are better than M&A but still demanding. Covered bonds are huge in Europe and the US is probably going to legislate in the coming months. Australia is behind the rest of the world, although banks here are now pushing for covered bonds and master trusts to be legislated and it's expected that it should be legal this year.
thx a lot for all the insights! what do you mean by "better" hours? can you quantify?
About 14 hours a day (9am to 10-12pm). I wouldn't say that the hours are much better than normal banking, but when you work that many hours an extra hour or two of not working makes a big difference. The securitization market is really heating up,expecially CMBS where are there are 4 new deals over a billion dollars. ABS has been pretty active as well.
creditflux.com (forcuses on Corporate CDOs) structuredfinancenews.com/ structuredcreditinvestor.com securitization.net http://bx.businessweek.com/structured-finance/news/
Many of these have paywalls but you can get some basic info without a subscription. Bloomberg also reports on CLO issuance.
On the corporate side, CLO issuance has come back in the US but given the levels that older vintage EUR CLOs are trading at I doubt the new issue market will be back for a while.
thx! although paywalls r quite extensive :(
Securitization Finance? What is it? Exit opps? (Originally Posted: 03/11/2014)
My understanding is securitization has to do with issuing bonds on certain assets...
Is securitization finance considered investment banking? What are the exit opps?
Thanks in advance.
It is under IBD in Bank of Tokyo
any idea about exit opps?
exit opps: non-existent
Securitization is a structured finance technique that involves pooling and repackaging financial assets with definable cash flows (e.g. accounts receivable) into securities that are then sold to investors. Basically, what you are doing is transforming a future income stream into a lump cash sum that you can use today.
Asset-backed security (ABS) Mortgage-backed security (MBS) Collateralized debt obligations (CDO) Collateralized loan obligations (CLO)
Do any of these acronyms ring a bell?
At the very least, I'm sure you have probably heard of them before. All of these bad boys fall under the umbrella term of "securitization." Even if you don't ultimately go into securitization, it probably doesn't hurt to be at least familiar with the concept since it is ultimately what is responsible for bringing down the world economy in the financial crisis.
Of course, to be fair, one could reasonably make the argument that it was the things that were securitized (e.g. mortgages held by consumers who had no way to repay them) that are to blame and not the technique of securitization itself. Honestly, that's a fair point because if you look at securitization deals that packaged bundles of debt that were totally unrelated to the US housing market, mortgages, etc., those deals actually performed well.
In terms of exit opps, while I'm not an expert, I would argue that securitization is definitely a specialized area within investment banking, so the exit opps available might be a little bit narrower compared to other roles. With that said, however, I would say credit hedge funds or private equity firms that do asset-based lending (e.g. through portfolio companies) would be interested in people who have a background in securitization.
Exit opportunities will depend on the specific role you have working with ABS products.
If you are in an origination role, you have more of an IBD slant as you will be working on longer term deals (issuances) of various ABS products.
If you are in more of a trading role then you are not concerned with how the securities are originated part but rather the payment speed, yield, credit quality of the tranches, value of the underlying assets, etc.
I am not as familiar with the exit opportunities on the trading side of things but the exit opportunities from the origination side are rather limited. The skill set developed on the origination side is not that related to the skill set you use when analyzing these products as investments. As a result all the exits from the group at the BB I work for are not great by WSO standards (think investor relations, lateraling to classic IBD groups at other banks). Only in a few instances have people transitioned into legitimate investing buy side roles.
Hope this helps. Let me know if you have other questions on the origination side.
Securitization / Structured Finance (Originally Posted: 04/08/2007)
Is there anyone who can go into a little depth about this field.
I've heard that many people who start in this field just stay in the field. But for those who leave it, what kind of exit opps are there. What are some of the hot areas of this field right now.
Also, some banks do lots of secured lending and principal finance through these groups. Does this provide you with any relevant skills for the future.
Lastly, how is this area looked upon for those who want to go to B-school after a few years.
I know this is a lot of questions, but even if you could answer a few of them I'd appreciate it
I'm starting in it this summer but not in IBD but at a big4 accounting firm. I know some of the exit options Ive been told by people that work there if you want, you can message me and I'll try to answer any questions you got.
Don't think I can answer many of the questions, but your comment about people staying in the industry seems right. 'Structured finance' is a very large field, so I'll stick to CDOs, and bear in mind these comments are from my observations, for what they're worth. Exit opps tend towards hedge funds (or some variant thereof), and usually funds that invest in ABS and CDOs at that. Many of the big managers are hedge funds related to very large insurance companies and banks. This isn't surprising, as the analytical techniques have been developed by actuaries and risk groups. I have seen few people move from SF to other areas, such as traditional banking or other hard-single-asset line of work (except those in CMBS/CREL). Some senior CDO people transition into traditional corporate executive roles, but revenue probably factors more into this than a CDO background per se. Non-SF funds are also entering the market (often blindly), so better fixed-income shops are likely to have CDO desks in time. There are also 'real companies' that are CDOs in nature that address isolated 'real issues', for those with a grounded bend.
The market is fairly new and people live very well and comfortably, so there hasn't been much incentive to leave. Real efficiency from SF techniques, complexity premia, and ubiquitous international institutional participation are good foundations. So, going back to the question, exit opps tend to be within the industry (buy, sell, or other), not unlike other facets in finance. The pond, however, seems large and diverse enough for many. Consulting probably has better broad exit opps, generally, but I'm speculating here.
How profitable are CDOs and how might the pay at a boutique CDO compare to that of a BB?
Just make partner at a big 4. 10 year or so track so you'd be in your early 30s, make 600-700k a year playing golf and drumming up business. Sure you won't make the 1.5-3mill ibanker directors make, but you never had to work 90 hours reguarly either.
IBD Securitization? (Originally Posted: 03/18/2014)
Hey all, I received an offer this summer within IBD securitization, and was trying to find more info on this forum but haven't read much about it yet. Is it considered front office and what are the exit opportunities? Any insights appreciated.
This thread might be useful for you:
http://www.wallstreetoasis.com/forums/securitization-finance-what-is-it…
Internship in Securitization? (Originally Posted: 06/11/2014)
I am about to start summer internship and got allocated to Securitization desk within CMO (which I haven't expected since am not particularly found of and was aiming for Lev Fin). Are there any exit opportunities or it's a dead end?Also, is it possible to switch to LevFin after an internship?
To be honest, and this is after a quick Google of what securitzation is, that group sounds really interesting. This is just an internship, you will definitely have the opportunity to change groups.
My current CFO headed MBS securitization at Wells Fargo at one point, so naturally, he was hired because of his understanding around productizing risk, which we currently do with medical device reimbursement. It's definitely not a dead end.
Securitization - Interesting opportunities (Originally Posted: 02/15/2007)
People have asked, but there haven’t been any good answers. What do you think of the securitization function of an investment bank? Does it have interesting opportunities, travel, good exit opportunities, good pay… I would appreciate anyone who has something to say.
gators, although this isn't from 1st hand experience, I hope this helps since there don't seem to be many securitisation guys on iBO (not sure what was in the answers that weren't "good").
Perception of securitisation: in the primary markets debt area it's a well respected department since it's one of the most technical. They don't work with the IBD guys, it's a very different type of job (nothing to do with company accounts for instance, this is purely a "product" position)
Interesting opportunities: since it's kind of making securities out of securities, there is a certain amount of product innovation. My other opps comments are below.
Travel: Not too sure. I have a couple of friends (analysts) in securitisation and they don't travel. Their bosses take part in presenations and I'd expect they go on the roadshows.
Exit opps: people tend to do this for quite a while, it's not like M&A or Leveraged Finance. It's quite specialised but you should be able to move to origination or syndication, espcially for Financials since banks and insurers are the main providers of securitisation. Moving beyond banking and into M&A or S&T type roles isn't really an option.
Pay: Not the kind of bonuses you get in M&A or S&T, but a lot more job security. Base should be more or less in the range of those those, but with a lesser bonus. That said, you'll still be earning a lot more than your friends out who aren't in banking.
with the pay. It depends on the firm and their department. Maybe it's just speculation, but interning at a BB, we found out that one of the first years in securitization banking last summer (MBS desk) received the highest 1st year bonus in the bank over IBD, S&T, etc.
You definitely develop a much more specialized skill set though.
Exit opps, from what I heard, could include S&T or even some specialized hedge funds.
Hours aren't as bad as banking either.
search for securitization banking..i think i've asked questions about it before and received some helpful responses.
Anyone else have any thoughts on securitization?
Euromonkey, what kind of road shows do securitization bankers do? It seems that if it is a product-based business that ibankers would generally take care of the "selling", leaving the securitization guys to develop new products, etc. Do the securitization guys come along too?
Also, FWIW, I've talked to several analysts in securitization, and pay was the same as IBD analysts, although this was all at one bank.
luke77, the securitization guys do go along on the roadshows too (just got confirmation). As far as I can tell this doesn't apply to analysts though, but then analysts get limited roadshow experience beyond securitization too.
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