What to choose - LDCM (more MO) at a to 5 Global IB or Rating Agency?
I have two choices and need to make a decision soon.
1) LDCM - this role is not originating or deal structuring. Instead is is creating loan screening memorandum, working with outside counsel, approving rates and loan sizes, then overall monitoring or revolving credit facilities and loans we act as left lead (speaking to CFO, internal and external rating agencies, etc). Role is considered FO and should have direct exposure to the deal team. Not in NY with 15% of year in NYC.
2) Fitch Associate (or maybe AD) for corporate (specific industry unknown) NYC
Target = HY Credit or Distressed Fund or P/E
LDCM.
Anything specific make you chose that?
Working at a credit rating agency myself, I've seen a LOT of turnover to the buyside, corporate banking roles, or (in the case of having experience in other FO roles prior) PE as well. I should note that I've yet to see someone move to a hedge fund directly, but the buyside route is fairly common (mutual fund or insurance) and once you're out there with an investment history to your name, a hedge fund would probably be the next logical career step. It's just not a direct leap that I've seen (yet) but it could be possible with the right connections. It may be that everyone at a credit rating agency comes from a non target school to begin with (but are still generally speaking, very smart analysts) or that most of them are looking for a less hectic life.
Being at a credit rating agency certainly provides you with a strong credit background if we're taking about corporate credit here. A couple things to note though- get coverage or be sure your team isn't top loaded in a way that you can't get coverage within a short period of time. Usually associate hires are given coverage but just be sure on that. Also, pay progression is notoriously bad once you get in, so negotiate the best you can for a salary you wouldn't mind having for 2-3 years provided you're getting solid skills and exposure along with it.
Feel free to pm me for further details on that route. Certainly don't let the stigma of being at a credit rating agency scare you off though. People will have you think it's at the bottom of the totem pole for everything, but in this economy where debt issuance is on the rise, you could stand to get great experience that blends research with private-side kind of deal experience.
Thanks guys. So far I have one LDCM and one Rating Agency. Anyone else want to opine?
I should note that as a credit analyst at a rating agency, it's more pure fundamental research than quantitative pricing/risk assessment of bonds/loans. I would imagine distressed investing leans toward fundamentals though since pricing of those instruments can be quite opaque.
And depending on the industry of coverage at Fitch, you could have a lot more experience doing recovery analyses than the LDCM route. Not sure if the LDCM team does recovery management as well, or it's done by a separate team (which I know Citi does). That would be good to know.
I'm guessing pay-wise it's not comparable? Or is it just a matter of which positions you best for the next step? Brand prestige is obviously a factor also. Fitch has significantly less than any global investment bank.
My view is LDCM will give you strong project management/execution skills, which are more valuable for a ECM - you support deals brought in by the industry teams or RMs, so you'll see a broad range of businesses and end up with a more rounded, more informed view of multiple business models than some agency analyst who has just looked at a narrow sector for many years while waiting for his/her manager to move on.
Apologies if anyone from an agency disagrees based on first hand experience, but that's at least how it has been relayed to me from people from S&P and Moodys.
All great points, particularly in reference to the networking aspect with banking teams. However, I think the argument somewhat skirts the OP's goal of going to the buyside for bond analysis either at a HY fund or Distressed fund (I see that PE is another option, but let's not forget these are his first two choices on the list). He was kind enough to provide a more detailed job spec which makes this role seem much more like a MO risk/Ops position where gaining real credit analysis skills would be far removed from the day-to-day.
I would compare this specific LDCM role to more of a portfolio management/ops role on the buyside where the work is much more compliance, price, and monitoring of basic credit metrics for covenants on an ongoing basis. The experience to say the least doesn't seem as robust or relevant to banking or fundamental analysis. If it were an origination role, I would recommend that over a Rating Agency all day long.
I think the mindset of 5:30 pm is certainly relevant to rating agencies for the senior level. That said, at the junior level, there's a ton of stuff to do if you ask for it. If the OP is sure to get coverage of names, there's a lot of work that goes behind that, regardless of what industry he's put in. And generally speaking, you don't really get pigeonholed in corporate credit. At my firm, it is hard to move across industries unless your boss becomes a cross-sector head. But even with that in mind, the basic skillset of a credit analyst is malleable to other industries, particularly if you're not in a niche sector. For instance, a Retail analyst will have a strong basic skillset that can translate to Media, or to Industrials fairly easily. Of course, if the OP is serious about moving to the buyside, that would be a transition easily made within 2-3 years at the Rating Agency, and it could be made to any sector outside of his current coverage. I've seen it happen half a dozen times since I joined in mid-2013.
@"flz401" if you work toward the CFA charter while at a Rating Agency, you'll definitely have the credentials to move to the buyside in a HY/Distressed credit analyst role. It may or may not be a mega fund with a fancy name, but it'll get your feet wet in bond investing which will allow you to make some really great contacts and build an investment history for yourself.
On the other hand, if you move into this LDCM role, your first mission is to network into an origination role to be a LCDM banker to get credit skills, then move to the buyside. You'd probably have to stay in the first role for at least 1.5 years in order to not piss anyone off, and then you could move into an origination role. At that point, you would want to stay in the origination role for at least 1.5 years before skipping out to the buyside. That's a fairly quick turnaround in itself, so it may take longer, but that's necessary to avoid bridge burning in such a political industry.
If your goal is only to get into banking/PE, go with LDCM and network. There's a greater value to prestige/brand and experience in a deal environment (not a research environment) in that case. And in general, it helps to be closest to the action.
Also, LDCM puts you in an environment where there is an internal pathway to sponsor coverage/relationship management, should you want to go that way in your 30s, For a longer term IB or PE career, the networking you get out of that is worth more than credit evaluation skills from an agency.
On the other hand, it may make more sense in the US system to go the MBA route for those connections. Even in that case, I think execution skills from LDCM would be a better choice.
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