High yield credit research investment pitch
Hey guys, I'm interviewing for a HY credit research role in the AM arm of a BB, part of the process is an investment pitch. Some data/credit info will be provided along with a few hours to work, then some time to present.
My background is in Rx but not on the financial analysis/modeling side (I can build a basic 3 statement/operating model however). I have a high level plan, understanding that the analysis is dependent on what info I get at the start:
Credit analysis component -- industry and company overview/risk factors, key business drivers
Financial analysis component -- key ratios (fixed charge, leverage, etc), operating info (historical financials and projections), capital structure/debt schedule, cash flow and valuation (FCF, relative val metrics and potentially down to a DCF)
Recommendation -- make a call and provide best/worst case scenarios, focus more on the downside as this is HY.
Does anyone have additional insight/advice on how to approach this? Feel free to shred the above... Would really appreciate any other info as well - thanks!
Following
You should have a relative value recommendation. Issuer A vs issuer B C D. Also within Issuer A which bond? (eg secured vs unsecured) at what maturity?
Look at pg. 21: https://www8.gsb.columbia.edu/sites/valueinvesting/files/Graham%20%26%2…
https://nyustern.campusgroups.com/simr/2021-simr-credit-pitch-competiti…
You need to incorporate credit metrics such as duration and z-spread into your research. You should also provide a relative valuation comparing with other HY bonds.
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