From CDOs to Emerging Markets--What Could Go Wrong?

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File this under ‘looking bubblicious’: according to a Reuters report on Monday, “displaced credit experts” have shifted their focus away from CDOs and other structured products to emerging markets in South America and Asia.

The newswire attributed the trend to an expectation that “a corporate bond boom [in those markets] will replace jobs lost in the securitization business.”

From Reuters:

…there are signs that some of the alchemists who helped create these now infamous securities backed by pools of bonds and loans are reinventing themselves in more traditional roles in one of the fastest growing areas in 2010: emerging markets.

Reuters spoke to former analysts who covered CDOs for credit rating agencies S&P, Moody’s and Fitch and who are now at hedge funds or fund of funds that specialize in emerging market opportunities and preferred to remain anonymous.

Some big buyside institutions also have been selectively hiring some former securitization experts.

…

Experience in securitization is a key skill for analysts PIMCO has been hiring in emerging markets, where issuance will grow due to an increasing need to fund infrastructure projects.

On the other side of the pond, headhunters in London are also doing a brisk trade in EM-focused recruitment, according to an FT story:

Niche financial groups, particularly those focused on emerging markets, are fuelling a recruitment spree in the City, say headhunters and bankers.

Leading the charge are groups such as Renaissance Capital of Russia and Religare of India that see enormous potential in markets such as Africa, eastern Europe and India.

And lest more ‘traditional’ finance types despair, it’s not just bond vigilantes and structured geeks who are in high demand.

M&A activity in these markets is heating up, and sharp-suited investment bankers will likely be a much sought after commodity.

But it’s not all fun, games and bonuses in emerging markets. The outlook for the UAE, for instance, is not quite as bright. As the FT reported in March:

In February, GulfTalent, a recruitment agency, said that Dubai lost 17 per cent of its professional workforce last year and reported that western foreign nationals had been hit the hardest.

"I still think there is a lot of pain to come out of the local market"?."?."?."?This is where we are going to see all the debt and credit issues coming out over the next 24 months," says Peter Greaves, director of financial markets for McArthur Murray, an executive search company.

"It's a better story in Abu Dhabi but they are by no means immune. On the financial markets side, I think this is the year that is going to be telling."

Don’t sell the house just yet.

Related links: Western bank rivals chase Asia talent – FT India banks plan recruitment spree – FT Russia's M&A market to swell by 50% in 2010 – EmergingMarkets.ME

This entry was posted by Stacy-Marie Ishmael on Tuesday, April 6th, 2010 at 14:55 and is filed under Capital markets. Tagged with asia, Banks, emerging markets, investment banks, Recruitment, south america, structured finance. Edit this entry.

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