Public Finance - Upcoming interview

TheKid1's picture
Rank: King Kong | banana points 1,099

I have an upcoming interview for a public finance position.. What type of technical questions will they ask? I've looked through the WSO and BIWS technical guide, but nothing specifically address technical questions regarding public finance. So anyone with some insight, can shed some light I would be very grateful..

Comments (28)

May 4, 2012

I saw that before, but I was wondering if I can get a little bit more details..

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May 5, 2012

Did a summer internship in public finance. Never asked anything technical during the interview, literally all fit and why public finance. The reason behind this is that most in public finance know that no one, including interviewees, aim for public finance as their first choice. Also, most of public finance is shrouded in mystery - as I'm sure you've found it's very difficult to find anything out about the industry. This works well for you; the information isn't available so you aren't required to know it.

May 5, 2012

Read "Bond Buyer." It's the industry standard periodical. If you want a technical book, there is a book called Fundamentals of Municipal Bonds. The publisher is Wiley something.

Know the treasury yields and LIBOR. Know behavioral questions. Be able to talk about one or two significant events in the economy and in the muni world.

Know taxable equivalent yield.

All of that is probably overboard. It will likely be behavioral questions, with a brainteaser possibly. Have a good answer for why public finance.

May 5, 2012

Thanks guy, erignal I sent you a PM.

May 7, 2012

One last bump, since the interview is in a few days. Anymore information will be very helpful.

May 8, 2012

Also, this the modeling software PubFin uses, if you want to become a little familiar:

http://www.dbcinc.com/products.php?arg=finance

May 8, 2012

^That one tends to be used by most... our group used an older program called Munex, sounds like a nasal decongestant, but functioned the same way.

May 8, 2012
eriginal:

^That one tends to be used by most... our group used an older program called Munex, sounds like a nasal decongestant, but functioned the same way.

Hey eriginal did you get the PM I sent you?

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Jun 17, 2013

Does anyone know of a good place to find information on public finance investment banking? Particularly the interview? I used the search function but didn't find too much on here. Thank you to anyone who can help out!

Best Response
Aug 26, 2013

mtanner189,

I used to work for a hedge fund that traded a lot of munis, so I talked with a lot of people from the major banks in both the primary (origination) and secondary (S&T) markets for muni bonds.

What I can tell you is that my four rounds of interviewing at the hedge fund were mostly focused on fit. I was never questioned about call provisions, or muni swaps, or how to price an airport revenue bond, etc. They mostly wanted to assess my work ethic, ability to communicate and analyze data, and if I could be pleasant when tired and stressed. That was it. I don't know of a single undergrad program that goes in depth on public finance and the MPA and MPP programs that offer public finance tracks aren't adequate preparation in the same way that an MBA in finance prepares you for IBD. The point is that most firms know you will have to be taught about public finance. My industry contacts on both the buy-side and sell-side, with some minor variations, had similar interviews.

If I were you, I would learn about the following topics to make sure that you are prepared for an interview:

*GOs versus revenue bonds
-Cal GO 5 of 14 = California general obligation bond paying 5% and maturing in 2014
*Types of revenue bonds at a high level (public power revenue bonds, hospital, water, etc.)
*Taxable equivalent
*Relationship to treasuries as a percentage
*Monoline insurers
*TANs, RANs, GANs, and BANs
*Call provisions
*Local and state government are notoriously bad at providing information to issuing agencies, so you should probably know some of those issues as well
*Size of market
*Latest league table
*The NYT has a section on municipal bonds

Penn has a public finance certificate, so you might find some info on their site.
The Kennedy School at Harvard has a good pdf on public finance options

I hope this helps.

By the way, for anyone else who reads this post, people talk about public finance being a path with poor exits. While there is some truth to the fact that you can get pigeon holed, effective networking goes a long way. I was able to land a job in SM PE through networking, although Cerberus will likely never be an option. You could probably talk your way into a job in DCM pre-MBA. Other changes would probably require an MS or MBA, but anything is possible. Just my two cents.

Quid Spucatum Tauri Est? Illegitimi Non Carborundum.

    • 3
Aug 26, 2013
  • Treat every interview like a real interview.
  • You'll likely be asked why pub fin vs corp fin... In pub fin you will be raising funds for municipal projects (roads, schools, stadiums, developments, etc) which you can see being built in your community. In corp fin the projects are less tangible - raising debt and equity for a publicly traded company or negotiating mergers and acquisitions.
  • Ask how the low rate environment is affecting his deal flow and where he sees rates going. I'd presume he's been busy (low rate environments are constructive for pub fin) so you can ask about recent deals.
  • Muni bonds are tax exempt so know how to calculate tax-exempt equiv yield or at least be comfortable with the concept. Know the difference between GO (general obligation) bonds and revenue bonds. Get comfortable with basic fixed income concepts.
  • It's imperative that you demonstrate an understanding of the difference between pub fin vs corp fin and have a great answer as to WHY you've chosen to pursue pub fin (tangible projects in community, interest in public policy etc)
    • 3
Aug 26, 2013

Thanks for your response.

Could you explain why a low rate environment is constructive for public finance? Is it because lower rates mean less interest being paid out to bondholders, meaning cheaper financing for the issuer?

Aug 26, 2013

Yes cheaper financing on "new money" projects and the ability to refinance outstanding debt with lower interest bearing debt

Aug 26, 2013

Not entirely true but for the purpose of a SA position that'll do

Aug 26, 2013

Do you say that because of low investment rates on escrows/project funds/etc?

Aug 26, 2013

Feel free to PM me

Aug 26, 2013

would consider this website: http://www.bondbuyer.com/

And so it goes

Aug 26, 2013

Don't think you need a tie - but it wouldn't hurt to wear one.

Aug 26, 2013

@ucmaroon- Yes, I've looked at Bond Buyer. Unfortunately, it's not a free site and since I don't have what Bond Buyer considers a valid work e-mail address, I can't even get a free trial. Thanks for the input though

Aug 26, 2013

doh! hmm, i will do some digging and see if i can find anything else

And so it goes

Aug 26, 2013

Bump. Got a hold of Bond Buyer, thanks guys

Aug 26, 2013

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Aug 26, 2013