Feb 20, 2024

Private Credit Case Study and Interview questions

Hi!

I have a private credit interview coming up for a Tier 1 firm. This specific team focuses on private credit in form of trade receivable bundling and trade finance. However, I am pretty sure the interview will be a generic PC case study. I went through the forum and got a few good inputs, and comments from previous threads. Never found a sample case study to practice, though.

Previous threads mentioned that the model will surely include a debt repayment structure. I would be thankful for any input, case studies on PC or such as debt repayment structure, or additional questions that might be asked for PC in general and specifically for trade finance or trade receivables.

Thanks a lot.

 

Ahoy there! Diving into the world of private credit interviews, especially for a Tier 1 firm, sounds like an exciting adventure. Based on the treasure trove of wisdom from the Wall Street Oasis, let's chart a course through what you might expect and how to prepare for your interview.

General Private Credit Case Study Insights:

  • Debt Comps: A key element often included in private credit case studies is the analysis of debt comparables to determine appropriate coupon rates and covenants. This will help you understand the market standards for similar debt structures and terms.
  • LBO Case Study Framework: While not directly related to trade finance, understanding how to approach an LBO case study can be beneficial. It provides a solid foundation in assessing a company's financial health and how debt can be structured within the capital stack.
  • Financial Analysis: Expect to dive deep into the financials. You'll likely need to assess the company's cash flow, working capital needs, and how these elements support debt repayment. Understanding the company's financial stability and growth prospects is crucial.
  • Investment Structure: Be prepared to discuss where you would invest in the capital structure (e.g., senior debt, unitranche, mezzanine). This involves evaluating the risk-return profile of different debt instruments.

Trade Finance and Trade Receivables Specifics:

  • Recession Resistance: Look for investments that are resistant to economic downturns. This includes analyzing the company's revenue model (recurring vs. project-based), customer base diversity, and overall market position.
  • Credit Investment Focus: Remember, the goal in private credit, especially in trade finance, is to ensure the return of principal with interest. Assessing the company's ability to generate stable cash flows to meet its debt obligations is key.
  • Downside Protection: Given the nature of trade finance, understanding the mechanisms for downside protection, such as collateral or insurance, can be particularly relevant.

Additional Questions to Prepare For:

  1. How do you assess the creditworthiness of a company in the context of trade finance?
  2. Can you discuss a time when you had to evaluate the risks associated with a trade receivable portfolio?
  3. How would you structure a deal to minimize risk while ensuring competitive returns in trade finance?

Remember, while the specifics of trade finance and trade receivables might not be the focus of every case study, demonstrating a solid understanding of private credit fundamentals, coupled with specific insights into trade finance, will surely set you apart.

Best of luck on your interview! Keep your compass set on demonstrating your analytical skills, and you'll navigate through this with flying colors.

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

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

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