Fixed Income Asset Management Interview question
Hi All,
I am currently interviewing with a Fixed income Asset Management firm for a credit analyst role. During the process I have been asked to prepare a 1 page summary report on a company (With no precisions of what aspects should I highlight), I would need some help in order to know what do you think are the key points to mention on a 1 page report? (I have more experience in CF advisory and was wondering how the analysis would change for that type of role, which ratios you think are the most relevant etc
Thanks a lot for your help.
Happy to give you my advice. Could you be more specific though on the instructions and/or exact type of debt you are supposed to analyze? One page isn't a lot so I assume you will have to "laser shot" what is relevant to look at.
And this may be an obvious question, but are you supposed to profile the company or the attractiveness of the bonds as an investment?
Thanks for your reply, I am not sure as I did not really have any additional information. The only rule they provided to me is : "Produce a 1 page analysis on a company X", I suppose that they want to see how would we approach it. IF that can help, the types of assets the fund works on are: Investment Grade bonds and ABS.
Any thoughts on which aspects I should focus on?
Cheers,
OK. Still not totally helpful but here's how I may approach it.
All IG companies are good companies at heart...but there is a bit of difference between A+ and BBB- in terms of spread. Also, you definitely want to avoid the possibility of any massive blowups/downgrades.
That argues for an approach of: - Quick description of the company, revenue breakdown, and operations - Dedicate half the page to a financial model. Show a few years of history and a year or two of forecasts. Make sure the model indicates key leading indicators of the business and highlight those. - Also make sure you highlight key ratios - growth, margins, leverage, coverage, FCF - Show the cap structure. Also show current ratings. - If you can, try to find a grid from the rating agencies that indicate IG ratings levels at various ratios. If you have an opinion that their rating should differ from current ratings on something, show that. - Finally, highlight any material risks for downgrades.
That's prob all you can do in a page!
I would add discuss how the fundamental profile of company A compares to its peers - B and C, etc. Based on these comps, should A trade inside or wide to B and C? Inside suggests it is a fundamentally stronger credit. Wider suggest it is a fundamentally weaker credit. There are other aspects of this like technical factors, but that's unnecessary at this point.
Also - make sure you make a recommendation. People want to see one, regardless of whether they agree with you or not. They will/should take into consideration you have limited to no experience. They just want to see a recommendation and your logic behind it.
Yes, definitely focus on the fundamentals of the credit and where it fits into the industry. Have an industry and credit outlook. Focus on the drivers of the drivers of the business. In addition to having a recommendation layout merits and risks to the recommendation. Would you invest in the company? If so, what tenor and where in the capital structure would you invest? Need to know basic metrics like debt/ EBITDA (may need to adjust for rent, leases, or pension liabilities, or other contingent liabilities such as asbestos claims, etc.) and FCF/ debt, interest coverage, etc. What is management's financial policy? Do they need to remain IG? If so, why? If they do need to remain IG, what is the ideal credit rating for them? Their peers are lower rated, will they be likely to lever up and move down in ratings as well?
Agree with comps. You need to be able to rank comps from high to low on a fundamental basis and then see where they trade. Can you pick up extra yield by buying X bond vs. Y bond despite it being rated lower? (i.e., your internal view or credit rating is actually higher on this bond).
I hope this helps. Let me know if you have any more questions. I put these together (although slightly longer depending on the credit) on a daily basis...
Thanks a lot to all of you for your help, I will include all the key points mentioned above. I think the main challenge is to be extremely concise as the analysis needs to be in a 1 p summary format.
Cheers !
Interview with Model Based Fixed Income Team at a leading investment management firm. Advice please (Originally Posted: 11/25/2010)
I have an interview coming up with the Model-Based Fixed Income team of an investment management company. I was wondering if anyone could provide me with some insight as to what the job entails, and how I can best prepare for the interviews.
Many Thanks
you are invited to an interview, so I dont think you know nothing about "what the job entails". There might be some questions or discussions concerning business ethics to which most of the interviewees dont pay enough attention. And if you are asked "what drives you to be such a professional/good/excellent/ambitious/etc. person?" kinds of question, just answer "curiosity".
Good luck with your interview
Post-MBA Fixed Income AM: Interview Preparation for PIMCO, TCW, DoubleLine, WAM (Originally Posted: 02/20/2018)
I am attending one of H/S/W next year and would like some advice on interview prep for investment roles at the large FI asset managers. I have been able to find very little information on what the interview process and questions are like and was hoping some people here may have some advice. I am specifically interested on the credit side of the world, but would like to make sure I am prepared for any sort of question they may toss my way.
Any guidance is greatly appreciated!
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