A day in the life of a credit analyst
Karan Pathak
Credit Analyst, Canada Life Asset Management
London, UK
Karan’s a morning person, awake at 5:00am and soon preparing to get to the gym before heading to his job as a Credit Analyst in the asset management arm of a life insurer.
Today is one of his office days – like many colleagues, he works a hybrid week, usually three days in the office and two days at home. He gets in around 8:30am and spends his first 10 minutes planning his day. Top of the list is switching on his Bloomberg terminal to check whether any companies have announced new bond issues this morning.
It’s a Tuesday, so it’s not surprising that there are a few that have done just that. One of them is in a sector that Karan covers – his areas of focus are housing associations, industrials, aerospace, and defence, and he covers about 70 companies on his own.
So, before he does anything else today, he must get straight on with some new issue analysis to prepare an opinion that he can share later with the portfolio managers (PMs) at his firm. If they want to invest in a new bond, they will usually have no more than 24 hours to get their orders in to the banks managing the bond issue, so Karan must produce his analysis today.
Using what he learned
This new issuer is a company that he hasn’t looked at before, so he’ll spend most of the morning studying it and putting together his own view of its credit quality, with a rating and an outlook, just like the credit ratings agencies do.
To do this he leans a lot on what he learned from the fixed income readings of the CFA® Program curriculum, which is something he finds super-relevant to credit investors. To be able to give an informed valuation of the new bond to the PMs, he needs to be able to interpret things like the relationship between z-spreads and swap spreads.
The z-spread might look tight, but that might just be because of where swap levels are – as with so much credit analysis, it’s all about interpretation and context, but that’s the kind of core understanding that the CFA Program gave him.
Once he’s got his thoughts together, he puts them down on an email and sends it around to the relevant PMs.
Why time management matters
Karan takes a moment to reset for his next task – and reflects on how working as a Credit Analyst isn’t like the job he once had on a trading floor, which had fixed market hours. Unlike trading, research never really ends, but that makes time management even more important.
It was the actual process of studying for the CFA Program exam that really helped him with time management. It was his first experience of education where the timetable wasn’t dictated to him – he had to take responsibility for his own time and set the right pace for his learning.
Even at university, where he studied statistics, economics and finance, the tight structure of his day was mostly set down by the course. Now he must be disciplined enough to be able to know when to stop a task as well as when to start it.
Some habits die hard, though: Karan still grabs his lunch from down the road and takes it back to his desk most days – just like he used to on the trading floor. But he also takes a lunch hour outside when he can, catching up with colleagues or just to get a change of scenery.
Deep research for the day job
With the new issue opinion sent and lunch out of the way, it’s time to get down to the other part of his role: diving into one of the 70 reports that he must write each year – one for each of the companies that he covers.
Today he carries on with the one he started on Monday. He’ll typically spend about 10 hours putting a report together, spread over two or three days. About half that time is research and thinking time, and about half writing. He’s already read last year’s report, and he’s gathered the recent newsflow about the sector, so today he is working through the company’s financials.
The financial statement analysis techniques he learned on the CFA Program help him a lot here. He was familiar with the basics before, but the CFA Program supercharged his skills by teaching him methods of expressing income statements and balance sheets as ratios that allow comparative analysis with other companies.
And on all this he must overlay an appreciation of the risk appetite for the company he works for – insurers are investing over the long-term, perhaps 30 or 40 years. He uses some of the more sophisticated knowledge he learned in his study for the CFA Program Level III exam to help with that, tailoring his view and outlook to what the PMs will consider important.
These days he experiments with artificial intelligence (AI) as part of his research. He’s not allowed to use the off-the-shelf ChatGPT, but his firm has its own internal model. He uses it to help when he finds himself at a dead end on a particular point.
And he keeps in mind what he learned in the Ethical and Professional Standards topic of the CFA curriculum. When quoting a secondary source, he’s careful to go back to the primary source to evaluate what he is being told. That means interrogating the AI about its sources – and then checking them himself. He uses it as a tool, not a shortcut.
Presenting – how he uses his soft skills
The final credit report is about three pages of writing, covering his opinion on the key credit risks for the company and his view of its financials and outlook in the context of sectoral and macroeconomic conditions.
The bit that takes the longest time is the conclusion – it’s only a paragraph, but it will be the main thing the PMs take away from the report and it needs to be a perfect summary of his research. He might spend an hour on that alone.
Tomorrow he’ll probably be sending a draft of the report to the PMs – he’ll be doing a 5–10-minute presentation of it to them later in the week, and so before that he’ll roleplay with his own managers the kinds of questions they are likely to ask.
It’s here where his analyst soft skills really come into play – understanding how to convey his opinion to the PMs in the room in a credible way is important, and it takes an ability to communicate and present clearly, distilling the issues down to their key parts.
On Friday, the report will be published, and it will become the internal view on that credit for another year.
The post-work unwind: cooking and coding
It’s about 7:00pm now, so Karan is packing up and heading home. Sometimes he might work a shorter day, sometimes longer – today is about average. With credit research it often depends on the time of year. In the annual earnings season, around March or April, it can be busier because analysts will be looking to publish a lot of their reports shortly after that.
Once back at home he’s straight into the kitchen to cook – it’s a big part of his de-stress. If he has time before sleeping, he might flick on the PlayStation for a bit of Fifa or do some self-study on coding. He’s done Python before – and it’s covered in the CFA Program – but at the moment he’s playing around in R-Studio, developing ways of analysing trade ideas.
Tomorrow he’ll be working from home, so he makes sure his desk is clear to let him focus. By 10pm he’s winding down, ready to get some sleep ahead of his early morning session at the gym.
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