Ratings agencies say they keep hiring despite downturn

Standard & Poor's commented that unlike the investment banks, the company is continuously recruiting at all levels.

Moody's is similarly upbeat: &quotWe do not fire when the market are down. Similar to our ratings approach we have a long-term vision and try to look through the cycle. We are committed to maintaining the loyalty of our associates,&quot a spokesperson said.

The numbers speak for themselves. Most investment banks cut staff during 2001. But in Europe alone, Standard & Poor's and Moody's increased headcount by 152 and 300 people respectively during the year.

Recruitment reflects underlying growth. Revenues at Moody's rose by 32% between 2000 and 2001. Net revenues at Goldman Sachs fell by nearly 5% over the same period.

Growth at ratings agencies was boosted by the high level of corporate debt issuance during 2001. Whether debt markets will be equally strong in 2002 is questionable. But events such as the collapse of Enron augur well for ratings agency careerists.

&quotAs markets becomes harder (to understand), customers are more interested in getting deep analysis,&quot said Betrand Richard at the search firm Korn/Ferry's Paris office. &quotThe volume of business for ratings agencies is increasing.&quot

Richard said the growing demand for ratings agencies' services in countries such as Spain, Italy, and Germany as well as Eastern Europe is also boosting recruitment.

The downturn in investment banking has the potential to provide a supply of recruits.

&quotUntil quite recently, banks were taking staff from the ratings agencies to work in their credit departments. That situation has changed. Ratings agencies suddenly look more attractive,&quot says Richard.

One of those to have moved from banking to the ratings agency sector is Duncan Rawson. A vice president and senior analyst in the insurance team at Moody's, Rawson was formerly the head of capital markets credit at Bank of America in London. He joined Moody's in December 2001.

&quotWorking for a ratings agency appealed to me because you get greater access to senior management at the companies you analyse,&quot says Rawson. &quotAs an insurance analyst at an investment bank you will get perhaps an hour with the group treasurer once or twice a year. As an analyst at a ratings agency you will get access to CEOs and CFOs for however long it takes for you to arrive at the appropriate rating.&quot

Rawson says that credit or equity analysts with specialist experience in a particular industry or product area will find it easiest to make the move to rating agencies. He himself specialised in insurance companies at Bank of America.

The downside of a ratings agency career is the pay. Richard says that though ratings agencies offer comparable salaries to investment banks, bonuses are usually between 20% and 40% lower.

Ratings agencies - a guide for students

Ratings agencies assign credit ratings to organizations and governments based on their ability to repay debt. Working for a ratings agency can involve a lot of international travel and close contact with the corporations or government institutions being rated.

The leading agencies include Standard & Poor's, Moody's and Fitch. All offer a range of positions for first time graduates and candidates with MBAs and second degrees.

Ratings agencies have traditionally been considered a potential route into some areas of investment banking. &quotMost banks consider the training and methodology offered by ratings agencies to be extremely good preparation for a career in investment banking&quot said Richard.

Working at Standard & Poor's

Standard & Poor's recruited 30 graduate and MBA level candidates in Europe during 2001 and plans to recruit 20 in 2002. The company also runs internships these take place on an ad hoc basis between March and September.

New recruits at Standard & Poor's can go into all business areas, including marketing and human resources. Most, however, go in as analysts.

Analysts join specific divisions. These include: corporate finance (company ratings), public finance (local government ratings), infrastructure ratings (including utility company and public project finance ratings), structured finance (rating credit derivatives and securitized transactions), bank loan ratings, financial institutions or insurance ratings, and sovereign ratings (national government ratings).

Candidates usually apply for a general analyst's position and are then directed to the area appropriate to their interests. Most first time graduates enter as research assistants. Candidates with a higher degree are more highly sought after and are likely to find a position as a ratings analyst. New entrants are offered comprehensive on-the-job training.

Individuals who speak two or three European languages and have a business administration or accountancy degree are particularly welcomed.