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. 061What is the difference between a loan and a bond?Syndication and loansCorephone / first roundTSTruist SecuritiesCorporate Banking · Atlanta · 2025

   Say this

   Five differences that matter: loans are usually floating rate and bonds fixed; loans are typically secured and senior, bonds often unsecured; loans amortise and can be prepaid freely, bonds are bullets with call protection; loans have maintenance covenants and a lender group you can negotiate with, bonds have incurrence covenants and a dispersed anonymous holder base.

   Then walk it

   1. Rate: a loan is SOFR or EURIBOR plus a margin, so the borrower carries rate risk. A bond is a fixed coupon, so the borrower locks its cost and the investor carries rate risk. That alone determines who issues which in a given rate environment.
   2. Security and seniority: loans are normally first lien secured on substantially all assets, which is why recovery rates on senior secured loans have historically averaged around 70 percent against roughly 40 for senior unsecured bonds.
   3. Prepayment: loans can generally be repaid at par at any time, subject at most to a 101 soft call for six months. Bonds have a non-call period and a declining call premium, or a make-whole for investment grade. So loans are flexible and bonds are not.
   4. Covenants and control: a loan has an identifiable lender group, an agent, quarterly reporting and often a maintenance test, so you can renegotiate. A bond has hundreds of anonymous holders, an indenture that is hard to amend, and only incurrence covenants. Amending a loan takes a call; amending a bond takes a consent solicitation.
   5. Tenor and size: loans run 5 to 7 years; bonds run 5 to 30. Bonds reach a much larger and more diverse buyer base, which is why a big financing usually uses both — a loan for flexibility and near-term needs, bonds for the long-dated permanent capital.
   6. The limitation to note: the distinction has blurred. Term Loan Bs are traded, rated and covenant-lite, which makes them behave a lot like floating rate bonds, and private credit unitranches blur it further.

   Where candidates lose it

   Answering 'a loan comes from a bank and a bond from investors'. That is no longer true — most leveraged loans are held by CLOs and funds, not banks. Structure the answer around rate, security, prepayment, covenants and holder base, and give the recovery statistic.

   Expect next

   • Which has better recovery in a default, and by how much?
   • Why does a sponsor use both in one financing?
   • How has the TLB blurred the distinction?

   Reported by candidates at Truist Securities (Corporate Banking, Atlanta, 2025). Source: Wall Street Oasis.

2. 062What are the different types of debt instruments a bank can provide to a corporate client?Syndication and loansIntermediatetechnicalTSTruist SecuritiesCorporate Banking · Atlanta · 2025

   Say this

   Group them by purpose. Liquidity products — revolver, commercial paper backstop, overdraft. Term funding — Term Loan A and B, bridge loans, delayed draw. Asset-based — ABL revolver, receivables factoring, equipment and inventory finance. Then contingent products: letters of credit, guarantees and bonding lines. Plus the capital markets products the bank arranges rather than holds.

   Then walk it

   1. Revolving credit facility: the core relationship product. Committed, undrawn most of the time, priced with a commitment fee on the undrawn portion plus a drawn margin. It is usually unprofitable standalone and is sold to win the rest of the wallet.
   2. Term loans: TLA amortising and bank-held, TLB institutional. Delayed-draw term loans for a known future capex or acquisition programme. Bridge loans for acquisition certainty, deliberately priced with escalating margins so the borrower is pushed to refinance into bonds.
   3. Asset-based: an ABL revolver sized on a borrowing base of receivables and inventory rather than on cash flow. Also receivables purchase and supply chain finance, equipment finance and leasing, and inventory or floorplan facilities.
   4. Contingent: standby and documentary letters of credit, bank guarantees, and surety or performance bonding lines. These consume credit capacity without funding, and for contractors and commodity traders they matter more than cash loans.
   5. Then arranged rather than held: bonds, private placements, securitisations and hybrids. A corporate banker's job is often to move the client from bank-held debt into capital markets debt, freeing the balance sheet while keeping the relationship.
   6. The framing that lands well in a corporate banking interview: each product has a different regulatory capital cost and a different return on risk-weighted assets. A revolver is capital-expensive and low-margin, which is precisely why the bank cross-sells against it.

   Where candidates lose it

   Producing a flat list. Group them by purpose — liquidity, term funding, asset-based, contingent — and then make the commercial point that the revolver is a loss leader bought with the rest of the wallet. That is how a corporate banker actually thinks about the product set.

   Expect next

   • Which of those is most profitable for the bank?
   • Why is a bridge loan priced to escalate?
   • When would you use an ABL instead of a cash flow revolver?

   Reported by candidates at Truist Securities (Corporate Banking, Atlanta, 2025). Source: Wall Street Oasis.

3. 067What are the primary categories of collateral securing an asset-based loan, and what are the nuances for each?Syndication and loansHardtechnicalTSTruist SecuritiesAsset Finance · Atlanta · 2023

   Say this

   Four main categories: accounts receivable, inventory, machinery and equipment, and real estate. Each gets an advance rate in the borrowing base, and the nuance is in the eligibility criteria and the dilution reserves, because that is where the actual availability is won or lost.

   Then walk it

   1. Receivables: the best collateral, typically 85 percent advance rate. But only eligible receivables count — under 90 days, not from an affiliate, not cross-aged, not from a concentrated or foreign or government obligor. Then you take dilution reserves for credit notes, returns and discounts. A 15 percent dilution rate can cut effective availability far below the headline rate.
   2. Inventory: typically 50 to 65 percent of cost, or an advance rate against net orderly liquidation value from a third-party appraiser. Raw materials and finished goods are worth more than work in progress, which is often worth nothing. Perishable, fashion-dated and bespoke inventory gets haircut hard, and consignment or landed-in-transit inventory has title issues.
   3. Machinery and equipment: advance rate against a forced-liquidation appraisal, often 70 to 80 percent of that value, which itself may be a fraction of book. Generic assets with a resale market — trucks, standard CNC machines — hold value; purpose-built process equipment does not.
   4. Real estate: often 50 to 65 percent of appraised value, amortising, and slow to realise. Environmental liability is the specific nuance, because a contaminated site can be worth less than zero to a lender who takes title.
   5. Cross-cutting nuances that matter more than the advance rates: perfection of the security interest, priority against purchase money security interests and landlord or warehouseman liens, the ability to control the cash through a dominion of funds arrangement, and field examinations plus appraisals at least annually.
   6. A worked number: 100 of gross receivables with 10 ineligible and 10 percent dilution reserve gives roughly 90 eligible less 9 reserve, so 81, times an 85 percent advance rate equals about 69 of availability. The headline 85 percent became an effective 69 percent.

   Where candidates lose it

   Quoting advance rates with no eligibility or dilution discussion. Availability is set by the eligibility criteria and the reserves, not by the headline percentages, and any ABL lender will test that. Also, do not forget the field exam and appraisal cadence — ABL is a monitoring business.

   Expect next

   • How would you size availability on 100 of gross receivables?
   • What is a springing fixed charge coverage test?
   • Which inventory would you refuse to lend against?

   Reported by candidates at Truist Securities (Asset Finance, Atlanta, 2023). 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.