STEFANO DEL ZOMPO, CFA
smallest group of people would come from other rating agencies.”
Th ose who want to work within the ratings industry will have
Title: Analyst
to work well under pressure, be prepared to defend their positions,
Current employer:
and work within a fairly regimented process all the while applying
Moody’s Investors Service
a qualitative assessment to a company and the way it develops.
Previous employer:
Allianz Private Equity Partners
For candidates who want to research a broader range of
Universities: SDA Bocconi;
fi nancial areas, there is also the option to join a fund rating agency,
University of Bologna/Trinity College
such as Morningstar, which has conducted qualitative research
Degrees: Masters in Corporate
since 1986, and monitors over 280,000 investment vehicles. “We
Finance; Bachelor in Economics have people who don’t necessarily have a huge amount of
Professional qualifi cations: experience of looking at funds, but who are very analytical and
CFA
intellectually curious. In the 20-plus years we’ve been operating
we’ve found that it’s easier to teach someone about funds and
investment than to teach them how to be analytical and curious.
Th ey also need to have the ability to put their thoughts on paper,
What attracted you to this career path?
and to write a logical argument,” explains Dan Lefkovitz, director
I have an interest in fundamental analysis and a belief
of business operations in the pan-European research team. He
that, in the long run, the application of superior
believes that charging a client for a rating is problematic. “We’ve
fundamental analysis skills will generate higher than
always thought that there are really some untenable relationships
average returns.
that arise when the same unit producing a rating on a particular
What are the major challenges you face in your
entity is also in a business relationship with them,” he says.
position?
Covering a wide range of companies from investment
HEAVY CRITICISM
grade to high yield is a challenge. Even risk for
He is not alone. Credit rating agencies continue to come under
investment grade companies has to be monitored.
scrutiny. Agencies may be required to register to operate within
Litigation risk remains a key variable to consider. In
the European Union, under new plans being put together by
high yield, the main challenge is identifying
regulators, bringing regulation more in line with the US model.
companies that will survive a negative economic
“Th e fact is that credit rating agencies signifi cantly contributed to
cycle, analyse their market positioning and pricing
the market turmoil by greatly underestimating the credit risk of
power to spot potential signs of distress. In this
structured credit products,” said Charlie McCreevy, the European
market, liquidity is key.
Union’s commissioner for internal markets.
Rating agencies are clearly frustrated by the criticism. “With
Are there certain skills you would consider useful the benefi t of hindsight, we acknowledge that we could have done
for your job? things diff erently, but the world’s regulators, banks, and investors
Attention to detail is foremost. Strong accounting missed this too, and so the role of rating agencies needs to be
skills and well as a solid basis in fundamental taken in some sort of context,” says Dinwoodie.
Cg
analysis are also important skills.
How do you think the role you’re in now will change
over time?
“There is not a model, short of setting
Rating agencies play a central role in fi nancial
markets and will continue to do so. Recent events
up a charitable foundation, which does
show the importance of the message that ratings
convey for all parties in the investment process.
not have potential confl icts. But we
Methodologies and models at the base of the rating
process will continue to evolve.
make sure everyone knows we are paid
Do you have advice for someone intending to pursue
the same career path?
by the issuer, and we have a lot of
In most cases, professional qualifi cations like the CFA
and Masters in Corporate Finance or MBAs are
necessary to join ratings agencies and grant good
internal checks and balances”
chances of internal progression.
Richard Hunter, Fitch Ratings
78
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