Anyone have good private credit interview guide?

Based on the most helpful WSO content, here are some insights and tips for private credit interviews:

Private Credit Interview Guide and Tips

1. Preparation for Private Credit Interviews:

   • Private credit interviews often overlap with private equity (PE) interviews but have a specific focus on credit-related aspects.
   • Expect to work on case studies similar to LBO models, but instead of focusing on equity returns, you'll analyze leverage, fixed-charge coverage, and debt service coverage.
   • Be ready to discuss debt comps, coupon rates, covenants, and the debt capacity of businesses. You'll need to back up your assumptions with solid reasoning.

2. Key Areas to Focus On:

   • Deal Experience: Be prepared to discuss deals on your resume, especially those financed with debt. Highlight trading levels, covenants, leverage, pricing, ratings, and credit strengths/weaknesses.
   • Market Knowledge: Stay updated on the general debt market. For example, know where the BAML ICE index is and review your bank's LevFin weekly or similar reports.
   • Downside Protection: Credit is about stable returns and downside protection rather than equity upside. Be ready to discuss risks and how you'd mitigate them.

3. "Why Private Credit?":

   • Highlight your interest in credit-specific aspects, such as analyzing leverage, covenants, and downside protection.
   • Emphasize the appeal of private credit's flexibility compared to private equity. For instance, in private credit, you can choose different parts of the capital structure (e.g., 1st lien, 2nd lien, unitranche) or even take a minority equity position if the deal is compelling.
   • Mention the velocity of deals in private credit, which allows you to work on and close more transactions compared to PE.

4. Case Study Tips:

   • Create a list of public comparable companies (5-10) and spread their capital structures to calculate leverage ratios.
   • Use Adjusted EBITDA from filings or press releases to determine debt capacity.
   • Be prepared to answer questions like, "How much leverage would you put on this business?" or "What interest rate would you charge?"

5. General Interview Advice:

   • Be authentic and show genuine interest in private credit, not just as a fallback from PE.
   • Prepare to defend your assumptions in case studies and explain your thought process clearly.
   • Practice discussing your credit thesis and how you'd approach investing in different parts of the capital structure.

Resources:

While there aren't many dedicated private credit recruiting courses, you can leverage PE prep materials and tailor them to private credit. Additionally, networking with professionals in the field can provide valuable insights and potential case studies to practice.

By focusing on these areas, you'll demonstrate a strong understanding of private credit and stand out as a candidate genuinely interested in the space.

Sources: Private Credit Resources and Prep, Private Credit Interview Advice