DCM interview how do I prep for technicals?
What do I need to know, from a technical standpoint and macroeconomic perspective. Would appreciate this thanks!
What do I need to know, from a technical standpoint and macroeconomic perspective. Would appreciate this thanks!
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I swear this is like the third time in a week this has been asked.
Boss, actually there is a Guide that covers ECM, DCM and a bit of Lev fin, not fully comolete but kind of works out for the interviews. Also try to read a lot of macro. Study SVB and Debit Suisse cases and what happened to them, main focus on what happened to their bonds ofc.
other than that not much to do honestly, happy to chat if you need to. I’ve completed an internship at DCM.
Hey man. Could you link me the guide? Would be super helpful. I just need to cover the basics of DCM, some technicals, the types of bonds they issue, and the deals they typically work on. I understand bought deals vs agency deals — I just need to know the specific products they may issue.
So basically, how dcm works is you are constantly following the market, and that means equities but mainly interest rate environment (in Europe its the midswap and in US is the UST) you basically need to be assesing the clients on when its a good day to launch the transaction.
Regarding technicals you should know the basics about how bonds work, as well as the main types of bond that exist. You have Capital (AT1 bonds and tier 2 bonds), Senior Bonds (in europe you have Sr Preferred and Sr Non-Preferred) and covered/secured bonds, that is for Banks. For insurance you have RT1, Tier 2 and Senior. And for corporates you have Hybrid and Senior.
I would also try to learn a bit about how rating agencies work and the relevance they have for the issuers.
Also know some stuff about the regultators and the capital requirements for banks, like what are they regulators and requirements.
A question you should be able to answer is why a corporation would issue a bond instead of obtaining bank financing which will always be cheaper.
Also lookup people that is in the position yo are applying to, it will be very helpful to get in contact with an intern or analyst that works in DCM and covers a similar group than the position.
Also, great piece of advice, show very very strong interest on the actual DCM business, do not make it seem like you want to get there to afterwards swich to the M&A side or whatever. you need to show passion for markets and say you are pursuing a long term career on DCM.. etc.
Prior to any interview, memorize (or write down if interview is online) the main indicators US Bond, German Bond, Current Interest Rates, S&P, Gold Price and some other relevant indicators. To prepare for macro, go throught the notes of the lastest FED and ECB meetings, that will also be helpful.
All great points. I would also add:
Try to get a basic understanding of FX and rates hedging, and the role this can play in an issuance.
Learn basic credit ratios and covenants, though this is far more important for HY than IG
Make sure to brush up on all the relevant basic fixed income concepts, like duration and convexity
Make sure you grasp the bond issuance process, the role of origination and syndication etc
Why would a corporation issue bonds instead of bank financing? I did my internship in debt financing and ik why they would go for TLA/TLB, RCF etc., rather than bonds, but not the other way round
I think because bank loans come with a lot more restrictive covenants than bonds. If you are a publicly traded company registered with the SEC, it becomes relatively straightforward to issue bonds whenever you need to, whereas loans, even if syndicated, involve lots of negotiations
also the bond market allows for longer maturities than the loan market, which is usually capped at 7yrs
Thanks! Seems so obvious now, lol
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