Sorry, but structured credit hiring is still DEAD

For a brief, flickering moment, it looked like something might be going on in the structured credit space. Deutsche hired a US head of structured credit sales and trading from Bank of America a few months ago. In January, UBS hired for high yield CDS, and JPMorgan and UBS began marketing something called 'collateralised synthetic obligations' around April.

If this isn't exciting enough, much has also been made of a comeback in securitisation. This week, Morgan Stanley appointed a new head of its European securitisation business. The Financial Times recently flagged a rush of hiring for US securitization teams. Previously, Financial News did the same for the UK. Morgan Stanley and Merrill Lynch are both rumoured to be building out their securitization businesses.

But for all the excitement, structured credit still looks heavily cadaverous.

Recruiters say securitisation recruitment amounts to a "few senior hires" which are "few and far between." Last month, figures from Dealogic show European securitized debt issuance at just $47bn for 2010. This compared to $425bn for the same period of 2007. And in the chart accompanying its Q2 results presentation, Credit Suisse clearly identified RMBS trading as an area judged to be going rapidly down the pan.

Meanwhile, banks like Natixis have been getting out of more complex areas like credit correlation trading, which has suffered heavily already and is expected to suffer further under Basel III.

"Recruitment within structured credit remains muted while banks assess current and future

changes to financial services regulation, in particular the treatment of credit correlation trading books," says Alex Tracey at Clifden Partners.

"Going forward we are going to see a lot of cheap assets sold to hedge funds from the big structured credit houses because the growing cost of capitalisation," says Russell Clarke at Fig Tree Search. "This will stunt the hiring across correlation markets, and possibly credit structuring."