Public Finance I-Banking Interview, Help!!
I have spent a lot of time reviewing for investment banking interviews using various guides (wetfeet, vault, etc.) The potential technical questions seem to be straight forward after a little bit of studying. Does anyone have insight into potential technical questions one might receive during a interview for the role of an analyst within a public finance banking team? Any thoughts would be appreciated, thank you....
well there is not equity component to public finance so practice your bond math. when i was a pub fin analyst we gave an excel test on calculating bond interest as well as calculating the proper PV so id be prepared to do that sort of thing in excel. also need a strong why public finance vs corporate finance answer.
analyst26,
can you elaborate the difference between pub fin and corp fin?
public finance is banking for government entities, ie cities, states, toll road authorities, public power utilities essentially anyone that has the ability to issue municipal/tax exempt debt. corp fin is for corporations so there is M&A, equity, debt and exposure to a broad array of products that arent available to a municipality
Doesnt sound like the most interesting type of work vs M&A/Corp Fin. Why'd you get into it? And where are you now? How are the exit ops?
sometimes you go with the best opportunities presented to you. i wanted to get onto a trading desk but had no luck and this role allowed me to learn more about fixed income & derivative products plus it gave me experience structuring cash flows. not great exit opps bc you arent looking at the entire capital structure so your skill set is limited if you want to go to the traditional PE/HF route, though I have seen both happen. if you want to move within the bank that is definitely possible. at the end of the day its not a bad place to start off but there are certainly more desirable areas to be imo. after my analyst stint i moved onto a derivatives trading desk
Public finance centers around issuing tax exempt debt. So know what they mean when they say "taxable equivalent yield." Also, when dealing with "munis" understand how the ARRA effects them.
Bump plz
bump!
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public finance is for losers
Public finance interview? (Originally Posted: 05/28/2010)
I have an finance interviewcoming up for an entry level position in public finance. Based on the description, it's financial advisory for local governments and analytical work. Admittedly I don't know much about this industry, but it seems really interesting from the job description. Any advice for my phone interview? I'm sure it will mainly be standard fit questions, but since the position is in public finance, what type of answers are they looking for when they ask, "why public finance, why interested in this field" etc. What other questions specific to this industry that I should prepare for?
TIA
I interviewed with Morgan Stanley's Public Finance group. Make sure you know a thing or two about municipal bonds and why you're interested in this particular aspect of finance. Otherwise, should be pretty standard.
Thanks. I'm reading up on municipal bonds right now. I really only know the very basics of bonds in general, but know that munis are exempt from income taxes. Is there anything else specifically about munis that would be beneficial?
Also, regarding interest for this aspect of finance, is there anything in particular they are looking for? I've read up on some of the answers for ibanking (e.g. enjoy analytical work, learning about valuation, working on challenging deals, etc.), but don't really know if there is something in particular that sounds good for public finance? My honest answer is the work seems interesting because it looks analytical and contributing to projects / financial advisory for local governments is interesting, but that seems like a weak answer and I of course want to stand out as best as possible.
Tax exempt is an important feature of muni bonds but you should have a broaders understanding, including the differences between GO bonds and revenue bonds and know how to calculate tax-exept equiv yield (or at least be comfortable with the concept). Being comfortable with basic fixed income concepts, in general, would be a good idea.
What kinda bank is it?
any advice for prepping for the interviews. Does anyone have examples of possible interview questions?
know what tax-equivlant yield is and how to calculate it
bump!
yield curve and current T-rates
-Difference between short term vs long term bonds.
-If a taxable bond yields 10%, at a %30 tax rate, what would a tax exempt bond have to yield in order to be equivalent
Case Analysis:
How would you finance a 200 million dollar sciene center your Univ. wants to build?
bump! I have a public finance phone interview soon. are there any other interview questions that i should be prepared for?
Public Finance interview HELP! (Originally Posted: 02/07/2013)
Hello monkeys,
Through relentless searching and networking, I've managed to gain an interview for a Pub Fin analyst position. Now, I've read all of the M&I stuff on public finance and been doing my own searches on the technical aspects of pub finance.
That being said, I could really use some advice on what I can expect from this interview. This is my first one this year and got it through a contact and friend at the bank; so I don't want to appear stupid or give my contact a bad repute. Again, this is my first interview (and could be only for awhile at the rate things have been going) so any thoughts and sound advice will get some SBs.
Thanks!
bump
Find out if it is for a specific pub finance group (higher ed, healthcare, p3, etc) and then note some of the bigger deals they have done in the last year ("yeah, I went to ____ University and I saw you were the senior underwriter on $250mm of their debt last year"). Look at MMD rates and where they spread to treasuries right now. Look at MMD today vs MMD over the last 10 or so years. It's probably not going to differ too much from any first round ib interview except that most any technicals will deal with debt. Know what coupons, yields, kicker, etc are. If you have any specific questions feel free to ask.
I agree with the above. In addition, know BABs, general obligation vs. revenue bonds, general knowledge of how public accounting differs, tax law, etc. Subscribe to bondbuyer.com, I believe you get 2 free weeks of access.
Thank you both.
Where is the interview (state)?
This is my advice:
Have your story down and know why you want to work with public agencies ("focus on everyday citizen, interested in finance, policy, and civil service and this role is PERFECT for that").
Expect the interview to be light on technicals, only basic bond math and vocabulary (and even that's not likely in the first round, if it comes up it will likely be from a conversational standpoint, not a real knowledge-testing scenario).
Research recent deals/what group you're in. Underwriting and advisory/structuring are totally different functions.
Even though you love the public sector so much, you don't want to work for a government agency (like a city financial office) because you've observed that they have less flexibility regarding advancement and job functions and you like serving several clients.
DO NOT compare PubFin IB to corporate IB. If they ask, just revert to your original reason for wanting to work for them. Do not say PubFin is "easier" or "has more manageable hours" or "I don't even care that I'll make less money!"
You totally love reading/writing legal documents
Never miss a chance to take a jab at Meredith Whitney
Things for you to talk about:
Ask about DBC
Ask about procurement process (Role of analyst for monitoring RFP issuances, what % of time is split between RFPs/execution of existing deals)
Ask about deals they've worked on in the past year, and which deals they think they'll work on in the next year. They'll probably enjoy speculating about government. Be informed and know how to pose slight questions/challenges (in a friendly way)
It's not always clear who their primary client base is; you may have to ask them about their most common clients.
What % of deals are competitive/negotiated (this one is admittedly pretty lame)
Ask if they can show you an Official Statement/Preliminary Official Statement. It's public record anyways, so they'll probably grab one for you. If not, it's a great reason to follow up.
Good luck!
Thanks, this is in New York City if that makes a difference. I plan on restudying much of the bond math I've gone over during the years; also have a list of Pub Fin lingo that I can discuss (RFPs, DBC, GO, Rev Bonds, Procurement, etc). Not sure what group they're filling, most likely wherever I fit; but I know the groups (for the most part) so I'll ask about them specifically.
Also... In addition to what Cruncharoo said
Start looking at deals the priced in the first quarter so far. I have been drowning in my own work so I haven't had a chance to check the broader market, but get familiar with what a credit spread is and how a credit rating affects the spread... Like said before try to understand the difference between GO debt and Revenue debt and which gets better rates.
Depending on the group and how much they expect from you it may get technical or it may just test you to assess your baseline.
GASB and FASB are worlds apart so I wouldn't go bury my head in an accounting book over the differences between expenditures and expenses. Because of that they likely won't try burying you with accounting questions since unless you are an accounting major and took a course on GASB and Government Accounting you won't know.
Bond Buyer is great to assess what is going on in the industry. Don't limit yourself to just news about "pricing $500 million deal" read into some of the bankruptcy stuff going on in different cities, maybe some P3 stuff, or anything that catches your eye really.
If it were me the key things I would really focus on:
Credit Rating Agencies/Credit Spread News in the Muni World (Illinois Pension Bonds, LA suing rating agency, etc) Yield/Coupon and Premium/Discount (if you know the technicals great, if not at least know what they are) GO vs. Revenue MMD/SIFMA/LIBOR
If you really wanna blow some minds talk about utilizing matched fixed payor swaps and VRDBs to create synthetic fixed rate debt..
I would actually avoid BABs entirely.. unless they bring them up
Thanks Calikid, I will definitely try and delve into something more tech just so I can have a "wow" factor.
Depending what group they work in they may talk about BQ and Non-BQ (Bank Qualified)...
It is a tax incentive that banks have to underwrite smaller deals ($10 million or less). Banks don't get to claim the tax exempt interest so when the bank has to take bonds into inventory they have to do the tax equivalent yield calc on the bonds.
there is a portion of the calculation that basically denotes how much of the bond will be converted to taxable.. on BQ bonds they get to claim 20%(I believe) as an exemption and thus the tax equivalent yield is lower(less taxes).
There are IRS stipulations to what percentage of assets banks are allowed to have as BQ bonds.. and for the life of me I don't remember something like 2-5%
And as such BQ bonds get lower yields than Non-BQ bonds all else being the same because the tax equivalent yield is lower
Is the bank you're interviewing for BB, MM or boutique?
If its BB (Citi, BarCap, JP, BAML etccc) or MM (RBC, BMO, Jefferi, Piper) I don't believe you will get a lot of technicals, as munis aren't really taught in school other than they are tax-exempt. Boutique you might expect a little bit more techinals.
You might want to know AMT, Non-AMT and Advance Refunding (More than 90 days, and can only be done once. if you decided to advance refund something more than once the second time around it will be taxable)
Current Refunding (less than 90 days and as many times as you want)
why do you we refund? To lower interest cost.
http://www.gkbaum.com/education/swap%20101.pdf
Check out the above link. Also if you have any questions feel free to PM me.
It is MM; job qualifications are: at least one year of fin service exp/ or combination of educational and fin service exp as determined by HR. They didn't even call me though for a screening, emailed me right after I asked my friend to introduce me and he sent out a referral to a few of the bankers they said that they "appreciated the referral" and ccd HR. They sent me an email inviting me in for a 2hr interview (I believe it is an interview, very ambiguous message).
Sorry for the short handed, unconstructed post. It's my day off with the snow and all.
This book provides a good overview of municipal finance. It's a little dry but highly informative.
http://www.amazon.com/Fundamentals-Municipal-Bonds-Wiley-Finance/dp/047…
Public finance ib interview for BB (Originally Posted: 02/01/2014)
Anyone gone through the process and know types of questions that are asked and what type of overall person they are looking for?
Big thanks.
WallStreetPrep has a great interview prep program. I recommend looking in to that. If this is a phone/1st interview expect mostly fit questions, be sure to know a good over view of the company, and know the concepts to fundamental tech questions.
1st round interviews Public Finance (Originally Posted: 12/05/2015)
I just got an email invitation for a 1st round interview at JPMorgan Public Finance. I have been in PWM for the past two summers. What should I expect and how should I prepare?
PWM will help you with being ambitious, as I came from the same background. I heard from an MD that the best way to get into PF is through Muni's/debt financing on the healthcare and infrastructure side, but am still looking to hear more about this --- any help is appreciated.
Public Finance BB Interview (Originally Posted: 01/10/2011)
Hey monkeys,
Total newbie here. I have an SA interview with the Public Finance branch of a BB later today, and I was wondering if any of you have any ideas about some good questions to ask them? I was going to ask two questions tangentially related to build america bonds and the 'imminent' muni-crisis, along with how investor appetite has changed due to muni becoming inherently riskier. The reason I ask is because the vp who interviewed me first round told me (when he called me to come for 2nd round) that I would be meeting with the senior MDs in the group. I was wondering if you all had any good questions I should ask, as I don't want to ask each MD the same 2 or 3 questions? Thanks in advance.
Cheers
Those are both great topics...maybe ask something region-specific (pubfin groups tend to be grouped into regional coverage) and why they find public finance particularly rewarding/interesting, etc. Definitley take a look at the muni underwriting league tables too (competitive and negotiated).
Ask them how they forsee the recent expiration of the BABs program affecting the Muni Market.
Also, mention increased MMD yields (the tax-exempt benchmark for muni deals), and the added difficulty to perform "refundings" of currently outstanding bond issues.
State budget defficits have come under increased scrutiny recently as well...
Interesting place for now, munis arent as sleepy as they used to be.
Public Finance interviews (Originally Posted: 04/06/2009)
Anyone had experience with them. Are they technical b/c I'm assuming it's a little different than asking about a company's balance sheet, etc.
http://www.investinginbonds.com/learnmore.asp?catid=8&subcatid=53&id=231
Any technical question they may ask will definitely be answered using the link above.
Public Finance SA Interview (Originally Posted: 02/02/2014)
Hey guys,
I have a few phone interviews scheduled with BBs in New York for a summer position in their Public Finance group. I know the exit ops aren't great but I'm just trying to get my foot in the door and will be excited to work anywhere. I've gone through older posts but if anyone has extra insight into these interviews I would greatly appreciate it. Also, some help with what interviewers are looking for when they ask "Why Public Finance? Why this bank?" would by greatly appreciated. I'm sure this will be mostly fit and I have the WSO guides but there aren't many specifics on PubFin. Thanks for the help.
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