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March 29, 2019  

Ambitious Morningstar Plans Hiring Blitz

Morningstar is expanding its structured-finance rating and technology groups.

The effort calls for the additions of more than 25 employees, including a vice president who would grade asset-backed bond deals and an associate vice president assigned to collateralized loan obligations. On the technology side, the hires would include as many as 10 professionals — many of whom would work on a recently launched effort to evaluate transactions employing blockchain tools.

Also on the list is someone to take a newly created post as head of ratings for infrastructure- and project-finance transactions. While that role falls under the umbrella of the agency’s corporate-debt and financial-institutions rating business, Morningstar president Brian Grow said it crosses over with structured finance — for example, sharing research and analysis on whole-business securitizations.

That recruit would work in Chicago. The rest would be in New York, including a vice president and two analysts who would cover commercial mortgage bonds.

The searches come in addition to a push by Morningstar to find a new head of residential mortgage-bond ratings. That individual would replace Kevin Dwyer, who left March 15 for fund operator Ellington Management. “The number of resumes and the caliber of people applying for that job have really made us feel good,” Grow said. “Overall, all of our groups are hiring.”

Morningstar ranked as the least active rating agency in the U.S. asset-and mortgage-backed bond market in 2018. But its market share rose to 8% from 4.9% the year before, thanks to assignments to grade deals backed by rental-home cashflows and home loans that don’t meet the Consumer Financial Protection Bureau’s “qualified-mortgage” standards.

The hope is to continue that growth, with Morningstar already having appeared on six of the 10 non-qualified loan deals that have priced this year, according to Asset-Backed Alert’s ABS Database. The agency also sees ample opportunities in the CLO market.

Morningstar especially is bullish on an expansion of its blockchain-technology unit. Its broader technology team already has grown to 50 from 20 since mid-2018, and has fielded inquiries from six prospective issuers of blockchain-enabled securitizations, Grow said. A deal could hit the market this year.

Morningstar additionally is creating a technology product that will allow its analysts and outside users to calculate estimated ratings as part of the deal-structuring process. The program will be available internally this year, with a 2020 launch date.