Apollo Interview for Credit Role
I am interviewing for a corporate credit analyst role for the summer of 2026 and was wondering if anyone could provide insights to help me prep. I am a non-target with no FI experience. Past internship at a boutique IB and taking a fixed-income class right now so I understand the basics.
Did thorough DD on the firm and understand what they do but I'm nervous since this is a big opportunity for me.
Any insight/advice would be greatly appreciated. Thanks in advance.
Attaching the technicals I'm studying. Heard it will be mostly behavioral but still prepping for everything.
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Technical Qs
What is duration?
- Duration measures how sensitive a bond’s price is to changes in interest rates
- Longer duration bonds are more volatile
What is convexity?
- Convexity measures how the bond’s duration changes as interest rates change
- Convexity means that a bond’s price increases more when interest rates fall then it falls when interest rates rise
- Higher convexity bonds are less affected by changes in interest rates – therefore, they have a higher price
What is negative convexity?
- Negative convexity means a bond’s price increases less when interest rates fall and falls more when interest rates rise
What is credit spread?
- Credit spread is the yield difference between a corporate bond and a risk-free government bond
- It reflects the extra compensation investors require for taking on credit and default risk
What is YTM?
- Yield to maturity is the rate investors earn on a bond if held to maturity and reinvest all the bonds cash flows at the same rate of the bond’s YTM
- An investor would only earn the YTM on a bond is the yield curve was flat; they would earn more than the YTM is the curve was normal; and less than the YTM if the curve was inverted
What is current yield?
- Current yield is equal to the bonds annual coupon payment divid3ed by the market price of the bond
- Investors prefer the current yield when they’re focused on short-term income
When is YTM preferred over the current yield?
- Investors prefer YTM over current yield when they care about the total return over the bonds life
What is an investment grade bond?
- A bond that is rated BBB-/Baa3 or higher
- They have low risk and tight spreads
What is a high yield bond?
- Bonds that are below investment grade
- They have high risk and wider spreads
What is a leveraged loan?
- A leveraged loan is a secured loan made to a company who has high debt levels or below investment grade credit ratings
- They pay a floating rate attached to a reference rate plus a spread
What is private credit?
- Private credit refers to non-traded debt issued directly through negotiated loans.
- These debt securities offer higher yields to compensate for lower liquidity and less transparency compared to public credit
What is structured credit?
- Structured credit refers to securities created by pooling loans or bonds and slicing them into tranches with different levels of risk and return
- Senior tranches offer low risk with a lower yield while junior tranches carry higher risk with a higher yield
What are asset-backed securities?
- ABS are bonds backed by pools of underlying assets such as auto loans
- They allow lenders to convert illiquid assets into tradeable securities which transfers risk and frees up capital
- Investors receive payments from the cash flows generated by those underlying assets
What is the yield curve and why is it important?
- The yield curve shows how interest rates change across risk-free bonds of different maturities
- It is important because it provides insight into market expectations
- An upward sloping curve signals a healthy economy
- An inverted curve signals recession risk
What type of embedded option is a benefit to the issuer? For the bondholder?
- A callable option is a benefit to the issuer; it gives the right for the issuer to call back the bond any time after the call period; useful when interest rates drop, and issuer can refinance at a lower rate; bonds sell for a discount
- A putable option is a benefit to the bondholder; gives bondholders the right to sell back their bond to the issuer; useful when rates rise; bond sells for a premium
- A convertible bond gives the investor the right to convert the bond into equity at a predetermined number of shares at a set conversion price; benefit to bondholder; bonds sell for a premium
How do you calculate total return of a bond?
- Total return equals interest income plus any price changes minus any fees
What drives a bond’s P&L?
- Interest income, rate moves, spread changes, and FX effects
What is NAV and how do you calculate it?
- Net asset value shows the firm’s per share value
- NAV is equal to the total value of a fund’s assets minus its liabilities, divided by the number of shares
What’s your view on credit markets today?
- Credit markets today are very attractive. With overnight rates near 4%, there’s a lot of opportunity to earn an attractive yield. With all the AI-related capex going on, these companies need flexible forms of financing which is exactly what a firm like Apollo offers. It allows Apollo to capture this monumental growth within the AI sector while also protecting its downside
Have not interviewed for this role ever, but a few things to note:
Your views on the economy are not developed enough. Your answer should do a better job at showing that you understand what drives rates, what's the impact of those rates, how are investor positioning vs such rates, what does this mean for spreads and pricing for different investors. It should come across as if you've taken time to understand / have been following for a while. At thr same time, you should maintain a concise answer.
Always useful to be able to walk someone through what makes a good lbo and lbo model, but from the perspective of a credit investor
Also do a paper lbo or 2. Even if not key focus for this job, it provides you with a framework potentially for a case study (e.g. how do the different line items adding up to fcf behave and what does this mean for me? What are the credit stats id pay attention to?)
Good luck
Very helpful! Thanks a ton.
Great to know the math / theory behind a lot of this stuff but also focus on what actually makes a good credit. I feel like this gets lost in the details sometimes. Decent chance they do an ad hoc case study describing a company and asking you to provide thoughts, then dig into your assumptions
When you say "good credit", do you mean what traits make a company a strong borrower or lending candidate?
yes
Just wanted to provide an update. Interview went well. Was asked to tell about my background, then we discussed markets for the rest of the time. Started with “What do you know about private credit?”, pivoted to “why do you think rates will be lower?”, “what’s your view on equities?”, “how is the current AI boom effecting monetary policy?”. Thought I gave solid answers that were well reasoned. I had a strong opinion and walked him through how I went about coming to my conclusions. That said, is it normal to not hear about next steps? This is a small team within Apollo and I’m sure they won’t be hiring more than 2-3 interns; possibly only 1. I just sent a thank you email and ended with “I look forward to hearing about the next steps”. What’s the timeline until I should hear back?
update?
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