securitized products internship prep?
starting an internship in securitized products at a BB. to my understanding, it's basically IB but for pooled assets. for those working in the industry, what's the best way to prepare for this upcoming internship? i don't think the group uses traditional financial models
This is not what you want to hear, but don't worry about understanding concepts, it's not a ubiquitous product. Most people that end up in securitized products don't want to be in that group, and tend to show people an attitude during the internship. Just ask questions, put effort in your work and you'll be fine.
From my experience , securitized products analysis tends to require higher level excel skills and creativity than traditional financial modeling where you are just adding and subtracting. Your tasks will probably revolve around manipulating data so you can perform some sort of analysis on it. You can prep by mastering pivot tables, index match, left right functions, v lookup, if statement, and getting an understanding of excel so you can aggregate and manipulate data in the way you see fit.
Example of something you might see in your internship: X company will give you a messy dataset that you have to analyze. In order to analyze the data, you'll have to clean and prepare the data in a format that is friendly for analysis. Knowing the above excel functions I mentioned will be extremely helpful in guaranteeing quick and accurate work.
sounds you had a terrible experience and that’s unfortunate. I completely disagree about people not liking the group.
securitized products might not get enough credit to compete with m&a at a US bank, but the team is very respected (+high revenue generation) within european and japanese banks.
securitized products can be quite different that traditional banking as we care less about companys financials.
we focus on the actual assets (aircraft, auto loans/leases, roads, rooftop solar panels, etc) that are being packaged into a structure that we sell to capital markets investors. depending on the asset you work with, theres quite a bit of modeling of future cash flow and running stress cases for investors to see how they can get repaid on their investment.
to help you prep, i suggest figuring out which asset class your group will be mostly working on. then go on Finsight.com to find recent deals done on that asset class, then google pre-sale reports from the rating agencies - these are comprehensive summary reports on the asset, structure, possible risks. if you cant find, you could always ask an analyst to send you a pre-sale for the most recent deal they did - it can give you some brownie points that youre taking initiative.
feel free to PM me if you have questions. goodluck
I interned in SP last summer at a BB and am returning full time. I would take what the first guy has to say with a grain of salt. Saying almost everyone in sp doesn’t want to be there is the farthest thing from the truth in my experience.
While you may be doing some data cleaning, we mostly were spreading comps for new deals, which for this asset class is comparing characteristics of the underlying loan pools, working on pitch decks, and a bunch of other stuff. It was very much like a traditional IB experience except you probably won’t be doing much modeling unless you are working with the structuring team. At least in my experience, but if you have an opportunity to work with them I’d highly suggest it. We also were generalists so we were working on all types of deals, from rmbs and cmbs to credit cards and esoterics like timeshares and whole business securitizations.
Like SF Banker said just start going through some presale reports and try to get a high level understanding of just how the products work and some idea of how they’re structured(hard credit enhancement vs soft credit enhancement, etc) Tbh they didn’t really expect us to know much about the products when we started so just use this experience to ask a lot of questions and see if you like the asset class.
Feel free to pm me if you have any questions
So you're telling me people that are in undergrad want to be in securitized products? Not true at all. Most people haven't even heard of the group, and usually want to do something related to corporate finance.
First, I said in my experience, not that it is an absolute truth. And second, all of the interns in my class that were in sp with me wanted to stay and are returning full time. I don’t get why Securitized products gets such a bad rep on this site. I genuinely find this stuff interesting, especially the esoteric stuff, and a lot of other people do too. Just because it isn’t “sexy” like m&a doesn’t mean there aren’t people who actually want to do it.
you’re being very ignorant.
securitized products is a very complex product quantitatively. most universities only recently started teaching securitization so thats why many people only tend to discover it when they get into the industry
Hey guys, have a follow up question as someone interested in securitized products.
What kind of internships should I be hunting for? Is it a subclass of S&T, Cap. Markets or IBD? Curious as I’ve seen some BBs have it as a separate internship (structuring & origination), under IBD and also seen it under S&T. Help? (anything re; london specifically would be appreciated!).
Really depends on the bank and how they classify it.
At my BB it was grouped under S&T and the S&T interns would rotate through both the banking side and the trading side if they were put in SP. There are quite a few programs that are solely placed in Sp though, which is what I was in, and you spend the whole internship there. So while it was grouped under global capital markets with the sales and trading interns rather than ibcm, you were doing more banking type work. I’m in nyc so I can’t speak to London but I know Gugg, Baml, and cs have these placed intern programs in Sp.
Some banks have it within Sales and Trading, others have it within IB. What makes it more confusing is that the securitized products group has many names and probably confuses HR, so I would advise using the following search words to find that group: Securitized Products Structured Finance ABS Fixed Income
Also think about what you want to do in to do within Securitized Products. They can be grouped into the following:
Structuring - (they put together the structure of the bonds (very quantitative group, you most likely need a mathematical background to work in it
Origination - They are the guys that help companies with the transactional part of the securitization (think of a typical banker). In this group you'll be pitching to different companies and helping them through the process (pitching to investors, managing the client's needs, managing rating agencies, etc)
Sales and Trading
why is the structuring so quant-heavy? what do they do exactly? do they get the loans to group from origination or can they find them from the market
They don't get the loans from the origination side. Contrary to the name, the originators in the banking group don't originate anything. Think of the origination side as the bankers that are pitching the concept of securitization to the company. Most of the time, it's the company that decides what to include in the pool of assets.
Structuring side will look at those assets and develop an asset and liability cash flow schedule
Asset schedule: This is tricky because they have to model out the payment of the assets in the pool, taking into account frequency of payments, the size of the pool (an auto loan securitization can have 30,000k plus loans), and any other complicated nuances associated with the asset. Assets like autos are simpler to model because the payments are monthly and standardized.. But if you have equipment assets, which can have annual/quarterly/monthly/seasonally/other, modeling out these assets can be tricky. Also keep in mind you have a lot of assets in a pool, so you need VBA and/or other programming software for this task as excel might not be able to handle so much data.
Then you have to model out the liability side, where you determine the waterfall (how cash coming from the assets will pay the bonds,other counterparties,etc), the note sizes/types of notes, taking into account the asset cash flows + expected losses + delinquencies of those assets.
The waterfall of the capital structure can be super complicated to model as you're converting legal terms and definitions into formulas in excel, and have to take into account what happens to cash when X event happens. For most auto deals, like a Toyota transaction, the waterfall is really simple (sequential pay capital structure, meaning the senior notes have their notes paid-down first, and then the junior ones. In case of a huge inc in delinquencies or defaults, senior notes are paid down full turbo (meaning all cash-flows from the assets are used to pay-down the notes). But for an aircraft deal issued by Carlyle, the waterfall is so complicated that I think the quants that came up with that waterfall are on good quality cocaine.
On top of all of this, you have to be mindful that investors may only want to invest in bonds with XXX rating, so you have to understand Credit Rating Agencies' Methodologies to meet the ratings threshold, and develop a capital structure that will also be economical for the issuer.
I hope this brief summary helps.
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can people please post if they are sophmores or juniors? makes a big difference in the response
Starting securitized products internship next year. Would be interested to know how the internship went.
I have my superday at a BB this week. What were the questions like at the final interviews?
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