Private Credit / Direct Lending Interviews - What to expect

Based on the most helpful WSO content, here's what you can expect in Private Credit / Direct Lending interviews:

1. Technical Knowledge:

   • Be prepared to discuss deals on your resume that involved debt financing. Understand the trading levels, covenants, leverage, pricing, ratings, and credit strengths/weaknesses.
   • You should be able to walk through why lenders or debt investors got comfortable with the deal.
   • Have a grasp of the current state of the general debt market. If your bank publishes a LevFin weekly or similar reports, review them to stay informed.
   • Check indices like the BAML ICE index for market benchmarks.

2. Market Awareness:

   • Know something about the current state of the debt market. This could include trends in leverage, interest rates, and how different industries are performing.

3. Interview Questions:

   • Questions will vary by firm, but strong knowledge of accounting, especially cash flow-related topics, is foundational.
   • Case studies may be similar to an LBO model but focused on leverage, fixed-charge coverage, and debt service coverage ratios.
   • Be ready to discuss where you would invest in the capital structure of a business, identify risks, and how you would price the debt.

4. Cultural Fit:

   • Expect questions on why you're interested in credit versus equity. Firms are looking for candidates with a genuine interest in the credit space, not just those looking for an easier path.

5. Modeling Test:

   • You might be given a Confidential Information Memorandum (CIM) and a few hours to build a model and investment memo, which you'll then need to defend to VPs and principals.

Remember, in credit roles, the focus is on stable returns and downside protection rather than the upside seen in equity deals. It's also noted that interviews for credit roles can be less technical and more focused on fundamentals compared to equity roles.

For a more comprehensive understanding, you might want to check out the WSO forums for threads related to Private Credit interviews. There are several threads with insights and experiences shared by professionals in the field.

Sources: Private Credit Interview Advice, Private Credit is Paradise, https://www.wallstreetoasis.com/forum/private-equity/qa-non-target-top-bucket-ssg-private-creditdirect-lending?customgpt=1, Q&A: Non-target → Top Bucket SSG Private Credit/Direct Lending