Presentation - Careers in Credit Research Aug 2014

8/9/2019 Presentation - Careers in Credit Research Aug 2014

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To define the Credit Research, Market & the services.

Provide an idea of its size and recent growth

Examine the career opportunities in the CreditResearch industry

Describe the competitive landscape and the ways to

reach there.

Introduce CCRA Certification program as a gateway tocareers in Credit Research and Ratings

AIM of this presentation

Confidential, Copyright - Powered by CCRA


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Definition of Credit Research and Analysis

Credit Research and Analysis

Research to assess the overall credit quality for

Investments into its fixed income related instruments

Fixed Income is an Investment that has an up-front capitalInvestment and pays interest on a regular basis

Credit research, usually includes credit analysis, fixed incomevaluation, credit rating. Credit assessment, formulating creditstrategy and credit enhancement



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Fixed Income - Products Common financial instruments:

Bonds/Debentures

Certificates of Deposit, Fixed deposits

Money Markets Instruments (short term)

Loans (including foreign currency loans)

Others



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Credit Analysts has to look at all risk factors for

a company unlike equity analysts and are more

concerned with Downside vs. Upside

Credit Analysts can be a any qualified person

MBAs, CFA Charterholders, Chartered

accountants, Cost accountants, Management

graduates or any credentialed professionalmoney manager equipped with appropriate

credit knowledge

As we understand.



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Client Segments Credit Research roles are targeted at any partof a business where there is a need for new

capital for e.g. for SMEs, large corporates,

private companies, special purpose vehicles,individuals, NBFCs

The roles could be targeted for independent

analysis like a credit rating analyst, Creditstrategy, credit structuring or a portfolio

analyst for a buy side/sell side firm



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There are only 51 stocks in the world that

are rated by more than 50 sell-side equity

research analysts. Of these, 49 are in India.

The only 2 stocks outside India are Apple and

Intel. (MS Report).

Equity Research per se has bulk supply and few

jobs which are inverse compared to the totalcapital out in the world

Equity is over played



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Bond market Size global - $123.2 TN (BIS Dec 2012)

CDS market size globally - $25 TN (BIS June 2013)

Equity market size globally - $50 TN

Globally equity is only about 25% of the total capital

available while the debt remains 75%.

Market Structure/size



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Credit Rating Agencies like CRISIL, ICRA, CARE, FITCH,

Moody's, S&P

Credit Information Companies like CIBIL, Equifax,Experian and Highmark

Banks/NBFCRetail and institutional Credit, Other

loans

BanksTreasury dept. Buying and selling G-Sec MNC BanksFixed income trading desks, Research

KPOs Tracking international Bond markets

Market Players for Credit



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CCRA Competitive Landscape Select names

GlobalPlayers

IndianPlayers

Ratings

High HighCapabilities

Source: logos are taken from the respective company's website and are not for marketing purpose.Confidential, Copyright - Powered by CCRA


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Credit Analyst Indicative Salary Scale



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Recent Regulatory updates: +ve NSE Launched its Debt trading segment recently and trying to promote it, other keyexchanges are planning as well

SEBI recently mandated Corporate bond database for all bond issuances along with

allowing FIIs to invest in selected bond markets

There are New AIF regulations allowing Debt Hedge funds to invest in Indian marketsalong with regulations for Infrastructure funds etc.

RBI Announced/approved CDS Guidelines in 2012 and all regulators, including PFRDA,

IRDA, SEBI etc. Allowed mutual funds to trade in the same

RBI is actively changing competitive landscape for debt/debentures etc. with

changing guidelines, rules

Recently around 20+ corporates applied for banking license and that will open up

banking jobs in 2014/beyond plus Nationalized banks are expanding



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Long Hours (less hours than Investment Banking)

Life will revolve around companies

A lot of phone time / meetings with clients, other banks, lawyers, & internalcolleagues

Credit analysis

o Financial Statement Analysis / Modeling and Industry Studies

Must know your clients better than the competition

o Investor Calls / Presentations

o Company press releases as well as reports in the media

o 10-Ks, transcripts, sell-side research etc.,

Broad product experience / limited understanding of each product

Competitive / High Pressure Environment

o Can be said about any position at a bank. Especially front office but alsomiddle and back.

Role of a Credit Analyst



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Analyst Role / Responsibilities Career / Role Benefits

Financial analysis and financial modeling Company valuation

Comparable analysis

Preparation internal credit / approval memos

Industry and company research Developing client presentations

Marketing material (i.e. Teaser, Confidential InformationMemorandum)

Updating all internal databases and systems Administrative tasks (set up calls, fax, FedEx, etc.)

Banking-like training programs Greater access to superiors & senior management

Truly understand corporate growth, financial analysis &capitalization

Develop strong knowledge of many industries Analysts tend to wear more hats than in larger banks

Quality of life: Hours, f lexibility, goals & expectations

Defined career paths & competitive compensation

Opportunity to change career path both internal /externally

Introduction to numerous business owners

Career Considerations

Career Options Firm Types Environment Work / Life Balance

Commercial banks Finance companies / specialty funds

Hedge funds and mezzanine funds Rating Agencies etc Trading Desks

10-12 hour days, weekend work depending on firm Medium/High stress levels: Pressure to perform,

competitive environment & demanding superiors withlittle room for error

Multiple deals / companies / projects at one time

Work frequently with others in deal teams of 24people within your group

Frequent fire-drill deadlines for client driven approvals Frequent meetings & conference calls throughout the

day



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Certified Credit Research Analyst(CCRATM ) Program Advanced international professional certification for credit

research, strategy and ratings professional, developed byindustry experts.

Has corporate acceptance

Global, regional and local education component

A program developed by highly qualified academics &practitioners; skillfully combines both theory & practice



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Strengths of CCRATM

Program Ensures an in-depth knowledge of Credit Research,

Strategy, Rating, Structuring etc

Focuses on Credit Analysis as a niche Provides access to rating methodologies, industry

practices, from global financial institutions

Teaches sophisticated techniques & takes a holistic

approach to a Credit Ratings, Analysis, Research

and Trading



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CCRATMAspirants ProfilesCandidates aspiring for a career in the following domains should pursue CCRATM

program:

Academics

Banks

Credit Analysis

Credit Ratings

Commercial and Retail Finance

Economic Research

Fixed Income Trading

Fund Management Investment Banking

Private Equity

Main Banking as well as Private Banking

Portfolio Management and Treasury



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CCRATM Examination Structure

The designation combines a topic-based and

levels-based approach Both progression and topic specificity are

present

There are two levels of examinations covering all

topic areas



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CCRATM Examination Structure Level 1 ExamMCQ based

Knowledge and understanding

Problem solving

40 one mark and 40 two mark questions

Level 2 ExamCase study based MCQ

Problem solving

Evaluation and judgement skills

50 one mark and 35 two mark questions (seven

case studies of five question each)



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CCRATM Examination StructureExamination paper structure: Online NSEExamination across 150 centers in India

Common Exam hours No. of papers Level 1 2 1 - MCQ

Level 2 3 1Case Study/MCQ

5 2 Passing Score - 50% with 0.25 negative

marking



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CCRATM

Course ContentLevel 1Module 1: Financial Statement Analysis

Introduction: Role of Financial Statements, Relevance of Notes, Nuances of

Accounting: Inventories, Depreciation, EPS, Intangible Assets, Ratio Analysis,

Financial Modelling and Covenant Testing, Nuances of Leases, Hire Purchase,Pension Liabilities and Classification of Investments in Financial Assets, Red

Flags, GAAP & IFRSSimilarities & Differences

Module 2: Credit Specific Analysis

Liquidity Analysis, Stress Testing, Comparison: Sector versus Global,

Liquidation Scenario and Event, M&A/LBO

Module 3: Understanding of Bonds

Covenants, Pricing, Spreads and Curves, Credit Default Swap (CDS), Seniority

Ranking, Rich Cheap Analysis, Bond Valuation Measures Including, Swaps,

OAS, YTW, YTM



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CCRATM

Course ContentLevel 2Module 1: Credit Rating Basics of Credit Rating, Credit Risk Management, 5C Credit Model, Analytical Framework For

Credit Analysis, Industry Risk, Business Risk, Financial Risk, Dealing With Intricacies Of Credit

Rating, Management Risk, Project Risk, Ratings Methodology For Manufacturing Companies,

Ratings For Financial Institutions And Banks, Sovereign Ratings, Case Study

Module 2: Credit Strategy Understanding Yield Curves, Trading On Interest Rate Risks, Understanding Credit Spreads,

Trading On Credit Spreads, Other Concepts on Credit Risk, Predicting the Market, Introduction

to Distressed Debt, Understanding Systemic Risk

Module 3: Credit Enhancement And Securitization

Credit Enhancement and Structures, Rating of Asset Backed and Mortgage Backed Securitization

TransactionsModule 4: Credit Risk Models and Regulations

Credit Risk Models & Miscellaneous, CRA Regulations and Debt Guidelines

Module 5: Understanding and Analysis of Corporate Banking Facilities

Understanding Types of Corporate Banking Facilities, Assessment of Working Capital Finance



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Curriculum Books Curriculum Textbooks are included in thecourse registration and are available in printed

and E-book format

Taxmann Publications (Level 1, Level 2) - Printed

Vitalsource Bookshelf (Level 1, Level 2)E-book

CARE Ratings, is the knowledge partner andcontributed immensely in developing the

entire content for CCRATM

http://www.taxmann.com/bookstore/academic/certified-credit-research-analyst-level-i.aspxhttp://www.taxmann.com/bookstore/academic/certified-credit-research-analyst-level-ii-aiwmi.aspxhttp://store.vitalsource.com/show/978-93-5071-333-4http://store.vitalsource.com/show/978-93-5071-381-5http://www.careratings.com/http://www.careratings.com/http://store.vitalsource.com/show/978-93-5071-381-5http://store.vitalsource.com/show/978-93-5071-333-4http://store.vitalsource.com/show/978-93-5071-333-4http://www.taxmann.com/bookstore/academic/certified-credit-research-analyst-level-ii-aiwmi.aspxhttp://www.taxmann.com/bookstore/academic/certified-credit-research-analyst-level-ii-aiwmi.aspxhttp://www.taxmann.com/bookstore/academic/certified-credit-research-analyst-level-i.aspx


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Curriculum BooksThe study material of CCRATMcertification also contains content reproduced withpermission from:

Asian Development Bank

Asia Securities Industry and Financial Markets Association (ASIFMA)

Bank of International Settlements (BIS)

Equator Principles Association

Fixed Income, Money Markets & Derivatives Association of India (FIMMDA)

India Ratings (subsidiary of Fitch Ratings) and Fitch Ratings

International Association of Credit Portfolio Managers (IACPM)

Loan Market Association (LMA)

Moodys Investor Services National Institute of Securities Markets (NISM)

Standard & Poors Financial Services

Swiss Financial Analysts Association

World Bank



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The pre-requisites for this program include:

Bachelors degree or equivalent qualification from an

accredited college or university/Institute.

Candidates appearing for the final year of bachelors

degree/equivalent qualification examination and those who

have completed degree requirements and are awaiting results

can also apply. Such candidates will be allowed to join the

program provisionally and confirmation will be subject to the

completion of the bachelors degree before the Level 1 Exam

of the Certified Credit Research Analyst (CCRATM) program.

Pathway to CCRATM

Certification



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Pathway to CCRATM

Certification Candidates can register via self study mode or

under the guidance of approved training

providers Recommended Average Study: Approximately

average 120 hours of self-study or training is

required to clear the exams. The Number ofaverage hours of study may vary based on

your understanding and background.

http://www.aiwmindia.com/index.php/training-partners/training-partner-directoryhttp://www.aiwmindia.com/index.php/training-partners/training-partner-directoryhttp://www.aiwmindia.com/index.php/training-partners/training-partner-directoryhttp://www.aiwmindia.com/index.php/training-partners/training-partner-directory


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NISM - National Institute of Securities Markets(An education Initiative by SEBI)

National Institute of Securities Markets (NISM) is a

society and public trust, established by theSecurities and Exchange Board of India (SEBI), the

regulator for securities markets in India, to improve

the quality of the securities and financial markets

through sustained capacity building and knowledgedissemination initiatives



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NISM - National Institute of Securities Markets(An education Initiative by SEBI)

The activities at NISM are carried out through the following Schools of

Excellence:

School for Securities Education (SSE)

School for Securities Information and Research (SSIR)

School for Investor Education and Financial Literacy (SIEFL)

School for Regulatory Studies and Supervision (SRSS)

School for Certification of Intermediaries (SCI) School for Corporate Governance (SCG)

National Centre for Financial Education (NCFE).



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Conclusion Credit Research Analysis will always be a critical function for financial

institutions and will serve important role in economy.

The market is growing with the entry of various institutions & products.Credit Analysis in this scenario provides a true differentiator and

sustainable competitive advantage.



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Presentation - Careers in Credit Research Aug 2014