The prospect of lower interest rates and more lending activity is expected to accelerate hiring of private credit and structured finance professionals in 2024.
The pace of hiring across the many flavors of private credit and structured finance slowed during the first half of 2023, while the Federal Reserve continued to raise its benchmark interest rate and the future of the U.S. economy felt less certain. But the second half of the year was different. Investors were increasingly optimistic about the Fed achieving a soft landing — lowering inflation without throwing the economy into a recession — and deal activity picked up. In turn, hiring bounced back.
RCQ Associates, a global recruiting firm that specializes in investment professionals, anticipates that hiring will stabilize in 2024. Private credit and structured finance workers were in especially high demand in 2020 and 2021 and RCQ Associates had record breaking years. After the slump in 2023, this year will be a return to normal. “We were never going to keep up the same steam [as 2020 and 2021],” Greg McGinnigle, the North American recruitment lead at the firm, told Institutional Investor.
The recruiting firm is optimistic about 2024 for a few reasons. They are growing more optimistic about the U.S. economy and increasing lending activity. Hiring to meet those needs has already started picking up, according to a recent compensation report by RCQ. But other industry trends will be tailwinds for hiring.
Alternative investment firms stepped in to lend when several regional banks, including Silicon Valley Bank, failed last year. That trend is continuing as regulation and expensive capital charges make some lending activities tougher for banks. The big alternative investment firms, such as Apollo and Blackstone just to name a couple, want to keep the momentum going in 2024 and will hire accordingly, McGinnigle says.
However, at the same time, traditional lenders are eager to take back market share. Citi, Nomura, Morgan Stanley, and others are already beefing up direct-lending businesses, McGinnigle added. Some trends that began in 2023 will also continue this year. For example, insurance companies continue to swap public for private assets and they are hiring more professionals who have experience in those asset classes. (Investment consultants and asset managers that cater to insurers are doing the same and created a peculiar talent crunch last year.)
“Talent with structuring skills have continued to remain in very high demand, particularly" people experienced with asset-backed securities and collateralized loan obligations, and that is expected to continue this year, according to the RCQ Associates report.
Although the economy is expected to improve, higher interest rates in the near term will continue to hurt some companies. Analysts with distressed credit and leveraged loan expertise were consistently in high demand throughout 2023, and that “will only increase in the new year,” the report says.
