Will depend a lot on the fund, but: What is the fulcrum security and how do you determine it? What are some ways to short credit? What do you think about the current interest rate environment/what is your focus (know LIBOR and TED, etc) What are your best investment ideas? What do you know about the bankruptcy process? How would you evaluate the collateral for a given company? Know how to calculate various leverage ratios and FCF-to-debt figures

These are fairly basic/qualitative; you could well be drilled on any number of bond/fixed income math concepts as well.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 

You find restructurings interesting / fun. More liquid. Deal flow. But also remember that people who work at credit funds most likely will be easily swayed by any reasonable response as it'll correlate to their view. You'll be fine.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 
Best Response

Leverage loans and HY bonds are not really impacted by interest rate sensitivity (duration) due to 1) loans tend to have floating interest linked to LIBOR, ie LIBOR + 500bps and 2) HY bonds tend to have shorter tennors.

Also, with loans and mezz there is no liquid secondary market so if you buy its usually buying to hold to maturity so you are more concerned with fundamental credit risk and the IRR you can get. Obviously with bonds there is a secondary market so there is also a focus on price. For example you might buy a bond trading at 80 if you think a change in the company's fortunes will see the price move back towards par (100).

Case study will most likely be them giving you an indenture or OM and asking you to formulate an opinion on the credit. Just model out the financials until the debt is due to be refinanced, look at the leverage and coverage ratios and EBITDA margins. Try to think about the business profile, what could go worng, credit is negative in focus and you want to avoid a default. Also, you should estimate a post default/recovery value for the debt so you have an idea of your risk/reward trade off.

Best of luck.

 

Had an interview for something relatively similar (debt HF) and the case was essentially assessing whether or not you should provide mezz. financing to a firm (assess FCF/ability to pay, what interest rate you should charge them, etc). Not sure if this will be similar to your case, but whatever the case is, it'll probably be the bulk of the interview.

"Money is a scoreboard where you can rank how you're doing against other people." -Mark Cuban
 

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