Debt Capital Markets interview preparation

Questions

100

Traced to a firm

45

Firms

26

Updated

September 2026

Asked at

All firmsTSTruist Securities5PIMCO4TD Securities4Apollo Global Management3Nomura3Scotiabank3Bain Capital2Houlihan Lokey2Mizuho2Neuberger Berman2Oaktree Capital Management2RCRBC Capital Markets2Carlyle Group1Deutsche Bank1Golub Capital1HPS Investment Partners1Invesco1KKR1Lazard1Moelis & Company1Moody's1Northern Trust1NUNuveen1Rothschild & Co1S&P Global1Wells Fargo Securities1

Topic

All topicsBond mechanics11Duration and convexity6Yield curve and rates5Credit spreads5Credit analysis and ratings13Credit modelling9Primary issuance9Syndication and loans10Structured credit7Covenants and documentation5Liability management5Indian debt markets7Fit8

Level

AnyCoreIntermediateHard

Type

AnyTechnicalBrainteaserMarket viewCaseFit

1. 033What specific line items on the financial statements would you look at when evaluating creditworthiness?Credit analysis and ratingsIntermediatetechnicalRCRBC Capital MarketsCorporate Banking · New York · 2026

   Say this

   I would go line by line with cash in mind. On the income statement: revenue trend, gross margin, EBIT and interest expense. On the cash flow statement: cash from operations, capex and the working capital swings. On the balance sheet: total debt by maturity, cash, and the off-balance-sheet items sitting in the notes.

   Then walk it

   1. Income statement: revenue growth and its stability, gross margin as the read on pricing power, EBIT, and interest expense. Interest expense divided by average debt gives you the effective rate, which is a fast check on whether the stated cost of debt is real.
   2. Cash flow statement is where I spend most time, because it is the hardest to dress up. Cash from operations versus EBITDA tells you the conversion rate. Working capital swings tell you whether growth consumes cash. Capex split between maintenance and growth tells you what is discretionary in a downturn.
   3. Balance sheet: debt by instrument and maturity, not just the total. Cash and undrawn revolver capacity, because liquidity kills companies before leverage does. Then receivables and inventory days against history, since a deterioration there is an early warning.
   4. The notes are where the real work is: operating and finance lease obligations, pension deficits, contingent liabilities, guarantees, receivables factoring and supply chain finance programmes, and the debt maturity table. Any of these can add a turn of effective leverage.
   5. Then the structural question the statements only half answer: which entity in the group actually owes the debt, and where do the assets and cash sit. Consolidated leverage of 3 times can hide a holdco that is structurally subordinated to everything.
   6. One quick number to illustrate: a retailer with 500 million of lease obligations and 300 million of drawn debt has effective leverage that is roughly double what the debt line suggests, and pre-IFRS 16 that was entirely invisible on the face of the balance sheet.

   Where candidates lose it

   Naming only the debt line and EBITDA. The answer that impresses a corporate banking interviewer goes to the notes — leases, pensions, factoring, guarantees — and then asks which legal entity owes the money. That is the difference between a ratio and a credit view.

   Expect next

   • How would you adjust EBITDA and debt for leases?
   • What would you check in the notes first?
   • How do you spot receivables factoring?

   Reported by candidates at RBC Capital Markets (Corporate Banking, New York, 2026). Source: Wall Street Oasis.

2. 041Walk me through revenue to unlevered free cash flow.Credit modellingCoretechnicalRCRBC Capital MarketsLeveraged Finance · London · 2026

   Say this

   Revenue, less cost of goods and operating expenses to get EBITDA, less depreciation and amortisation to get EBIT, times one minus the tax rate, then add D&A back, less capex, less the increase in working capital. That gets you unlevered free cash flow, before any interest.

   Then walk it

   1. Say the word unlevered and mean it: no interest anywhere, and tax is computed on EBIT rather than on pre-tax income. Taxing EBIT is what makes it capital-structure neutral.
   2. The D&A dance looks circular but is not. You subtract it before tax because it is deductible, then add it back because it is not cash. The net effect is the tax shield only.
   3. Working capital: an increase in receivables or inventory is a use of cash, an increase in payables is a source. For a growing business this is usually a drag, and in leveraged finance it is often the line that decides whether a deal works.
   4. Capex is the judgement call. Maintenance capex is committed; growth capex is discretionary and can be cut in a downturn. For a credit case I would model the two separately, because the downside scenario turns off growth capex and keeps maintenance.
   5. For a leveraged finance seat, say what you do next: subtract cash interest, cash taxes on the levered basis, and mandatory amortisation to get cash flow available for debt service, and that is the number the covenant and the sweep actually run off.
   6. One limitation to flag: unlevered free cash flow ignores the fact that a levered borrower may have a different effective tax rate because interest is deductible. That is the whole reason the tax shield is valued separately in an APV framework.

   Where candidates lose it

   Taxing EBIT at the wrong line, or leaving interest in. If interest appears anywhere in your build it is not unlevered. And in a debt interview, do not stop at UFCF — carry it through to cash flow available for debt service, because that is the number the desk uses.

   Expect next

   • Now take it to cash flow available for debt service.
   • How do you split maintenance from growth capex?
   • Why is tax computed on EBIT rather than pre-tax income?

   Reported by candidates at RBC Capital Markets (Leveraged Finance, London, 2026). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.