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Sectors explained: Data Providers & Ratings Agencies

Data Providers & Rating Agencies

Providing the information that fuels investor sentiment

Credit rating agencies assess the likelihood that an organisation or country issuing debt will fail to pay back its creditors fully and on time – called ‘going into default’.

Debtors are rated from AAA (virtually guaranteed to pay up on time) through to C (indicating a high risk of default). Risks are classified as ‘investment grade’ if they come in at BBB or above, with anything less known as ‘speculative grade’.

Data providers supply financial markets and media with critical real-time information such as company share prices, exchange rates, research and analytics, and tools and software for tracking portfolios. They also offer financial and business news services.

Key players

The ‘big three’ credit rating agencies, Standard & Poor’s (S&P), Moody’s and Fitch Ratings, control around 95% of the market. S&P and Moody’s have around 40% each and Fitch has 15%. In the market data and analysis industry, Bloomberg and Thomson Reuters remain locked in a battle for the top spot – the former had a market share of 30.82% and the latter 29.48% in 2012, according to Burton-Taylor International Consulting. Other key players include Dow Jones/Factiva, Interactive Data, FactSet, SIX-Telekurs and IRESS.

Roles and career paths

Rating agencies usually recruit graduates into data analysis jobs. Trainees typically start in research teams focusing on industry sectors and/or financial products. Fitch has a structured graduate programme. Moody’s and Standard & Poor’s recruit according to need. Because the graduate programmes give a grounding in fundamental research and a broad understanding of particular industries, many who start out in rating agencies gravitate towards research roles in other parts of financial services. Data providers offer a variety of graduate roles, including data analysis, finance, IT and sales. They also hire into editorial positions – Bloomberg, for instance, employs around 2,000 journalists globally.

Pay and bonuses

Graduate trainees within data providers can expect to start on $40-45k, depending on experience and academic background, according to recruiters. Rating agencies typically pay $45k at junior level, with the possibility of a small bonus. Further up the ladder, credit analysis roles pay well. After five to seven years, salaries are $90-
120k, according to the Robert Walters salary survey, rising to $120-150k after seven to 10 years.

Skills sought

Data providers value IT skills, such as Microsoft Excel and Visual Basic, even if the role isn’t related to technology, and desirable degree disciplines include mathematics, finance or economics, according to Fahid Naeem, head of EMEA recruitment at Bloomberg.

“We look for applicants who are proactive, motivated, and eager to take ownership as we expand our regional and sector coverage,” he says. “New talent and technologies drive the team to innovate and we place a strong emphasis on continuous training and development: an appetite for learning is essential to this process.”

Meanwhile, rating agencies require their analysts to be subject matter experts not only in their particular field, but also in the “possible influences on it from macroeconomics, politics, local and global trends, and technology”, says Alex Griffiths, senior director in Fitch’s corporates rating team.

“Our people need to be able to form strong opinions based on detailed analysis, to defend these internally to help form a consensus view (because ratings are assigned by a committee rather than an individual) and to communicate this view effectively to the outside world,” he says.

“There are a limited number of places on graduate schemes and competition is high. We typically favour candidates who can demonstrate a genuine interest in finance. The graduates we hire have often already sat one or more CFA papers and had relevant work experience,” he adds.

The Overview 14

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