Junior credit analyst: How much am I worth?

The fear that haunts every journalist - including this one - is that what he or she writes matters so little that it is eventually no longer read. The successful credit analyst has no such concern: what they write - in the form of fixed income credit research notes or papers on bonds and other fixed income instruments - will usually be read avidly both within and outside the firm that they work for.

"Sellside credit analysts generally specialise in a sector or portfolio of companies," says Richard Fraser of RJF Global Search. "They report directly to the head of credit research but are also answerable to origination, trading and external clients." Fraser adds that whilst in the past a credit analyst typically covered corporates and financial institutions, they now actively cover transactions as well.

"Credit analysts focus on trading and/or lending with both sides having close interaction with the front office," says Christine MacKenzie of Morgan McKinley's Credit Division, adding that the latter analysts are effectively endowed with the responsibility of holding part of their institution's purse strings.

What sort of a background does an up-and-coming credit analyst need to become, well, a senior, more respected credit analyst? An excellent academic record, ideally from a well-regarded university in economics, business studies or a finance-related subject, is just the starting point.

"Typically junior credit analysts will have 6-12 months experience within a corporate or investment bank often gained through a graduate training scheme or internship, whether this is in the UK or abroad," says Mackenzie, adding that increasing numbers of European graduates with some banking experience are coming to London because the opportunities are better.

Anything else? Good analytical skills are vital; not just the ability to undertake such things as cash flow modelling and sensitivity analysis, but to appreciate cause and effect and have a good understanding of all the instruments on the fixed income market. Fraser says asset backed security-focused analysts can command a premium, as can credit strategists. Important for all are excellent presentation and communications skills.

So how much cash can a junior analyst earn? MacKenzie says someone with up to two years experience can expect between 25,000-35,000 basic with a bonus of around 30%. This rises sharply after two years, with Fraser suggesting someone with three to four years experience sitting on a base of 45,000-65,000 basic whilst expecting a bonus of anywhere up to 100%. Mike Stubbs-Egginton of search firm Napier Scott estimates that such an individual would probably be on a base of no more than 50,000 and a bonus between 25%-50%, depending on performance.

The real advantages of being a junior credit analyst, however, are the opportunities the role can throw up.

"The junior credit analyst position is a great way to gain exposure to different areas within an investment bank through direct dealings with traders, relationship managers, operations and the legal and compliance departments," says MacKenzie. This type of exposure opens up a wide variety of career directions for credit analysts to take. At present, with hedge funds all the rage, many take up credit analyst positions within that sector: the money is good, the work challenging and you are usually based close to the delights of the West End rather than the grey old streets of the City.

For those who stay the course, however, and remain within traditional credit analysis, big money can come their way. Stubbs-Egginton says individuals who get a name for themselves within a particular credit sector can earn as much as 250,000. Not bad going - especially as you also have the satisfaction of knowing your scribblings really matter.