Private Credit Interviews

How do private credit interviews differ from private equity interviews? Can you suggest some guides/ videos/ courses I can look at?
I get that credit investors would typically look at covenants, and maybe also a different profitability metric (FCF for principal but also op margins so interest is paid out), very novice in this field - pls suggest!!

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WSO Monkey Bot

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24d

Based on the most helpful WSO content, here are the key differences between private credit and private equity interviews, along with some resources you can explore:

Key Differences in Interviews:

Focus on Credit Metrics:
- Private Credit: Emphasis on debt comps to determine coupon rates and covenants. You'll need to understand credit stats, such as interest coverage ratios and leverage ratios.
- Private Equity: Focuses more on equity returns, such as IRR (Internal Rate of Return) and MOIC (Multiple on Invested Capital).
Deal Discussion:
- Private Credit: Discussions will revolve around the credit thesis, including the borrower's ability to service debt and the structure of the loan.
- Private Equity: More emphasis on the overall investment thesis, growth potential, and exit strategies.
Modeling:
- Private Credit: You might be asked to model an LBO but with a focus on credit metrics rather than equity returns.
- Private Equity: LBO modeling with a focus on equity returns and value creation.

Suggested Resources:

Private Equity Interview Course:
- Includes 9 LBO Modeling Tests and more. This can help you understand the modeling aspect, which is also relevant for private credit interviews.
- Private Equity Interview Course
Private Credit Interview Advice:
- A thread discussing what to expect in private credit interviews, including the focus on credit thesis and specific metrics.
- Private Credit Interview Advice
WSO Academy:
- Offers various courses and bootcamps that can help you prepare for both private equity and private credit interviews.
- WSO Academy
Private Equity vs. Private Credit Forum:
- A detailed discussion on the differences between private equity and private credit, which can provide more insights into what to expect in interviews.
- Private Equity vs. Private Credit Forum

Additional Notes:

Debt Comps: Understanding debt comparables is crucial for private credit interviews. This involves determining the appropriate coupon rate and covenants for a loan.
Credit Thesis: Be prepared to discuss the borrower's ability to service debt, including free cash flow (FCF) and operating margins.

By focusing on these areas and utilizing the suggested resources, you can better prepare for private credit interviews.

Sources: Private Equity vs. Private Credit, Private Credit Interview Advice, Private Credit Resources and Prep

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Bingo Pongo

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23d

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PC is focused on downside protection while ensuring their target return is hit. Without mentioning equity kickers / going down the rabbit hole (keeping it simple), upside does not apply to lenders. Whereas, PE is focused on maximizing upside potential via ramping up a platform and etc (ie finding ways to exit at strong MOICs). As such, assessing an opportunity will be different pending which lens you’re wearing.

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Private Credit Interviews

Key Differences in Interviews:

Suggested Resources:

Additional Notes:

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