Fixed Income Credit Research Analyst - Interview help
Hey all,
So i have an interview on monday for a Credit Research Analyst in a Fixed Income department that works with Corporate bonds and some lev. finance portfolios.
The role involves some fundamental credit and relative value analysis on the debt securities. it also makes some reccomendations based on credit risk and yield in order to earn high retruns.
I do not have any experience in the Fixed Income securities nor do I have too much knowledge. I want to ace this interview been in the job market for a while.
What information should I know and what should I learn before this interview. How can I ace this fucking thing. Particulary interested in the opinions of those who work with these securities as well.
Thank you for your help in advance.
Def understand the impact of the fed. Also take a look at the league tables. The guys with the big balance sheets own this space. Fixed income is all about interest rates and the credit metrics of a given company (aka leverage relative to EBITDA and coverage aka ability to repay debt).
Read an S&P report on a given company or two. Fixed income prices off of their credit ratings. Understand why prices move (effectively change in yield).
what about actual bond pricing concepts and the like(will be studying these concepts regardless in preparation)?
anyone else have any input?
I actually had an interview for a credit research desk (albeit for an internship) two years ago. I did get asked a lot about bond pricing in addition to accounting. From my limited understanding, credit research requires the understanding of financial statements and accounting that you would associate with equity research, as well as the the bond maths for a fixed income desk (which is why credit is actually my dream asset class to be placed in because it combines the best of both worlds for me)
Most likely, you'll get asked general bond questions about z-spread(for relative value analysis), how you price a bond, the yield curve, the different risks etc. You'll also probably be asked the types of questions they ask in an ER interview, like how are the diff financial statements connected, etc. I also think it's important to have a clear idea of the equity vs debt-holder conflicts of interest.
They asked me what kind of things I would look for from financial statements in credit research vs ER- My answer was that Credit Research focuses more on cashflows and not as much on potential growth, since as a bond-holder you are essentially only concerned with getting back your principle + the coupon payments, and do not benefit beyond that no matter how much the firm grows (you know that payoff diagram for the value of debt and equity against assets where equity has unlimited potential whereas debt levels off after a while?) In fact, some investments that equity holder see as positive will be viewed in a negative light from the perspective of bond holders, since it will run down the firm's immediate cash and its ability to meet debt repayments.
They were happy with this answer, but I'm not 100% sure so someone correct me if I'm wrong.
I hope that helped somewhat!
Hi, I have an interview coming up for HY credit research analyst. I wanted to check for relative value analysis, are you looking at Z spread or spread over relevant Treasury as the starting base to compare spreads?
I'll to above that corporate fixed income/credit analysis (especially on the high yield side) also requires a strong understanding of corporate bankruptcy law. Find a way to learn it.
Fixed Income Credit Research interview coming up...HELP! (Originally Posted: 09/16/2015)
Hello all. I usually just lurk these forums without posting, but today I need some help. I've got an upcoming fixed income research analyst position coming up, I'm in college so this will be an entry level position. It is with a very large firm with high AUM.
The dilemma is, I don't have any background or work experience in fixed income. I'll be starting an unpaid position in it soon (which wont result in a job, its a boutique), and am signed up for my school's fixed income class, but this interview is very soon.
Anyone know of any crash courses that I can take to prepare for this interview? I REALLY want to do FI research. Will I need to give a pitch? How deep do these interviews usually go? HELP!
Firstly, what is the strategy of the fund you're interviewing with? Prepping for a HY interview will be a lot different than IG.
I would definitely suggest preparing a pitch on a particular debt instrument. In the case of a HY/distressed debt pitch, you would want to look at valuing the company and water falling that value through the cap structure. Understand the potential recovery for the piece of debt as well the risks the would drive it downward.
IG is a bit different and I'm not as certain as how to pitch it, but you would prob want to look at relative yields between different IG companies within the same industry. Also be aware of the company's credit rating.
That's all I got, but you can definitely impress your interviewer if you know what you are talking about. I would suggest you talk to some people (alumni?) within comparable asset managers to learn about different investment styles.
Thank you for your input! The strategy is IG, so I'm not sure if a pitch is as fitting. I have a good understanding of bond mechanics, but that's it. The tip about looking at relative yields between different IG companies is great (and credit rating), but I'm sure there is more to this.
Anyone else have knowledge of IG credit research? Thanks.
Fixed income research associate interview help (Originally Posted: 09/29/2012)
I have a final round interview for a fixed income research associate position with a wealth management firm, and am hoping you can help / advise me on how best to prepare.
Here is the job description:
"Under general supervision, research and recommend various investment vehicles (with a primary emphasis on fixed income – credit analysis and monitoring) for client investment. Work in a team environment with other Research Analysts with additional responsibility of fixed income trading"
And here are a couple of the listed responsibilities:
"Monitor existing holdings to assess continued exposure. -Research new investment ideas for portfolio consideration. -Execute individual fixed income transactions while adhering to the fixed income 4-point test"
I have a little under two years of experience within public finance and debt, but I don't know the best way to prepare for this interview as my experience was with munis. What should I be reading / familiarizing myself with? There will be a project / assignment given to me which I will have to present as part of the interview, and I have no idea what that will entail (although the interview confirmation email mentioned it is nothing I need to prepare for in advance, and will be based on daily work assignments for the role). Also curious what is the "fixed income 4-point test"? I have not heard of this and couldn't find it through Google.
Based on this job description and your experience, can you please point me in the right direction to help prepare for this interview? Thank you very much.
Anyone?
Interested as well. Hopeful Consultant PM me I'f like to hear about your experience
Accounting/Credit Research Interview Question. (Originally Posted: 02/26/2012)
I had an interview last week for a credit research analyst role and was stumped on one particular question. One of the industries the interviewer covered was shipping and General Maritime Corp., which filed for bankruptcy a few months ago, was brought up Shipping rates are in the dumps right now and GMR needed a daily rate of around 30k to break-even. At around the time they filed, rates were at around 5k. Instead of earning this 5k, shippers have been parking their ships. Looking at this with an accounting perspective, why would they choose to keep ships idol instead of earning the 5k? Don't remember the numbers he threw at me (variable overhead, fixed overhead, etc.). I didn't have an answer and he didn't bother providing one. Anyone want to share their thoughts?
If your variable costs are greater than your revenues, your profit maximizing option is to go out of business.
If operating your ships costs 30k and you're only making 5k, you're making a loss of 5k variable + 20k of fixed costs. Therefore, get out of business.
However, if your total costs are 30k and you are making 15k, then you should keep operating even though you're still losing 10k.
Essentially, to keep operating, your revenues must be greater than your variable costs in the short term. In the long run, both fixed and variable costs need to be lower than revenues.
Credit research associate interview (Originally Posted: 05/09/2013)
Hi everyone,
I have been scheduled for an interview for credit research associate analyst at an investment management firm. The group is investment grade and it is entry level position.
I have prior credit research experience, however am wondering if anyone familiar with the industry can think of any technicals or nuances that I should study up on before I go in (aside from the typical "walk me thru DCF" stuff)?
Much appreciated!
You should know where various spread levels are trading, for example, where does the BBB space trade, 200bps, etc. Also have a view on whether or not we are in a bond bubble and if you think spreads are too tight. In so far as technicals I would imagine they would ask you about how you look at credit risk; business risk vs. financial risk and maybe ask you a few questions about reading through bond docs, looking at covenants and understanding cap structures and contractual/structural subordination. I've been asked to pitch a bond or credit idea but those were for distressed debt funds so I doubt you will be asked about that. I was also asked questions about cash flow modelling, for example how you get from EBITDA to FFO and to CFO and then to FCF.
All the best!
Brush up your fixed income knowledge. What is modified duration? What is z-spread? What's a covenant? Etc.
Also, as above poster said, know what the current spreads are for different ratings (although you said it was only investment grade so probably just look up where the current treasury rates are at). This might sound obvious, but also make sure you know what is the lowest rating an investment grade bond can get...
Thanks!
@OV: Yeah, I will look at basic FI stuff (have fabozzi FI book in pdf on my screen now), but seeing as it is entry level credit research, I'm hoping that they won't be asking me anything about cash flow modeling.
What to expect for a high yield fixed income research interview? thanks! (Originally Posted: 01/22/2013)
on campus recruiting, it's an entry-level position.
FT?
right
EM credit research interview help (Originally Posted: 11/18/2012)
Hi - I'm a recent MBA graduate with a couple of upcoming interviews with EM credit funds. I understand credit analysis and fundamental research, but am struggling to come up with good trade ideas, as price data on EM corporate bonds is very hard to find (I don't have access to any databases right now). Do any of you have any advice for me on this (or example of good companies I could research) ? I'm most interested in high yield or dislocated/distressed EM credits. Thanks in advance for your help.
what about sovs?
Are you looking for companies in a specific industry? HY/IG? Distressed? If you provide some more specifics, I can help.
I would look at complicated companies that are in distress, have a ton of debt and look at the various levels/prices along the capital structure. You'll find a lot of relative value plays. Really look at upside/downside scenarios for each level of capital structure. Find a company that has a binary outcome which will be the catalyst.
Socrates, PM me if you're still in need of help
Credit Research Interview HELP! (Originally Posted: 01/26/2010)
I have a credit research interview with a large well know mutual fund/Asset Management think (PIMCO, BlackRock). Can anyone tell me what i should expect and what i can do to prepare? what type of analysis do they focus on? will i have to pitch them a stock? any help would be great.
bump
I would say know the various solvency, liquidity, and interest coverage ratios. Know the financial statements well (this goes for any finance job), and be able to discuss debt financing concepts and EVERYTHING about bonds. If you want to go deeper, you can research some credit risk modeling concepts. If it's for a fixed income fund as you describe, I don't think they will ask you about stocks, though any finance job can ask you about stocks to get a feel for your general interest in the markets. In addition to the corporate finance topics, I would focus on understanding all the major debt products since it is a fund after all (investment grade, high yield, municipal, Treasury, emerging market, event-linked, asset-backed, etc.). It's also good to know some benchmarks/indexes for the different debt securities.
Interview High Grade credit Research Analyst (Originally Posted: 01/01/2018)
So I received an email to do a digital interview for the position stated in the title. Anyone know the questions? or how much weight these videos have? I have only done a video interview once and I did horrible. I post this here and the equity research forum due to the application stating it is in the sales/trading/research division.
Logisticjoe, way too quiet in here. What about these resources:
Or maybe the following WSO members have something to say: bryanturner Ram234 Grizzled Guru
I hope those threads give you a bit more insight.
Digital interview for CIB - High Grade credit Research Analyst (Originally Posted: 01/01/2018)
So I received an email to do a digital interview for the position stated in the title. Anyone know the questions? or how much weight these videos have? I have only done a video interview once and I did horrible.
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