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. 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.

2. 042How does depreciation flow through the financial statements?Credit modellingCorephone / first roundOaktree Capital ManagementDebt Capital Markets · New York · 2026

   Say this

   Take 100 of depreciation at a 25 percent tax rate. Pre-tax income falls 100, tax falls 25, so net income falls 75. Cash actually rises 25, because depreciation is non-cash and the only real effect is the tax you no longer pay.

   Then walk it

   1. Income statement: 100 of depreciation reduces EBIT by 100, so pre-tax income is down 100 and net income is down 75.
   2. Cash flow statement: start from net income at minus 75, add back the 100 of non-cash depreciation, so cash from operations is up 25.
   3. Balance sheet: cash up 25, net PP&E down 100, so assets down 75. Retained earnings down 75. It balances.
   4. The point is the depreciation tax shield. A non-cash charge of 100 generated 25 of real cash, which is why capital-intensive businesses have effective tax rates below the statutory one.
   5. For a credit analyst there is a second point: EBITDA adds depreciation straight back, so it is unaffected. Which is exactly why EBITDA flatters capital-intensive borrowers — the asset is still wearing out and will need replacing with real cash capex.
   6. So when I see high depreciation I immediately compare it to capex. Capex persistently below depreciation means the business is under-investing and the cash flow is borrowed from the future.

   Where candidates lose it

   Saying cash falls. It does not — depreciation is non-cash and the only cash effect is the tax saving. In a credit interview, also make the EBITDA point: adding D&A back is why EBITDA overstates the cash a capital-intensive borrower really has.

   Expect next

   • Now do 100 of capex instead.
   • What if the company has no taxable income?
   • Why is EBITDA a poor proxy for cash flow in a capital-intensive business?

   Reported by candidates at Oaktree Capital Management (Debt Capital Markets, New York, 2026). Source: Wall Street Oasis.

3. 044How do you get from enterprise value to equity value?Credit modellingCorephone / first roundTSTruist SecuritiesCorporate Banking · Atlanta · 2025

   Say this

   Subtract net debt and everything else that is a non-equity claim on the business. So enterprise value, less total debt, plus cash, less minority interest, less preferred stock, less unfunded pension and capitalised leases, plus the value of associates and other non-operating assets.

   Then walk it

   1. Total debt means all debt-like obligations, not just the bonds: bank debt, drawn revolver, finance and operating leases, securitisation, and any deferred consideration that behaves like debt.
   2. Cash is added back but only the cash you could actually take out. Trapped cash in a jurisdiction with withholding tax, or cash needed for operations, is not fully creditable. Most desks haircut it.
   3. Minority interest comes off because enterprise value reflects the whole consolidated business while equity value belongs only to the parent's shareholders. Associates and joint ventures work the other way: they are not consolidated in EBITDA, so their value gets added.
   4. Preferred stock, unfunded pension deficits and mandatorily redeemable instruments are all non-equity claims. Leaving pensions out is the single most common omission, and for an old industrial it can be a billion-dollar error.
   5. For a credit analyst the bridge is the same arithmetic used in reverse: you take a market or DCF enterprise value and walk down the claims to see how much cushion sits beneath your debt. That is the equity value, and it is your margin of safety.
   6. The limitation: the bridge is only as good as the debt schedule. Off-balance-sheet items — factoring, supply chain finance, guarantees — sit in the notes and belong in net debt even though the balance sheet does not show them.

   Where candidates lose it

   Reciting 'minus net debt' and stopping. The marks are in the other claims: minorities, preferred, pensions, leases and non-operating assets. On a corporate banking desk the pension and lease adjustments are the ones they actually use.

   Expect next

   • How would you treat an unfunded pension deficit?
   • Would you add back all the cash?
   • How does this help you size a loan?

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

4. 051How does a company decide between raising debt and raising equity?Primary issuanceCoretechnicalScotiabankCorporate Banking · London · 2026

   Say this

   Debt is cheaper and non-dilutive, so the default is debt until the capacity runs out. The real constraints are the rating and the covenant headroom, the volatility of the cash flows, and whether management thinks the equity is cheap or expensive.

   Then walk it

   1. The cost argument: debt is senior so it demands a lower return, and interest is tax-deductible so the after-tax cost falls further. Equity has no tax shield and sits at the bottom, so it is always dearer on a required-return basis.
   2. The constraint is capacity, not cost. Every extra turn of leverage raises the probability of distress, and at some point the rating agency downgrades, the spread jumps, the covenant binds, and the flexibility to fund the next opportunity disappears. Financial policy is usually expressed as a target leverage or a target rating for exactly this reason.
   3. Cash flow character decides how much capacity there is. Contracted, recurring, low-capex cash flows support 5 or 6 turns. Cyclical, high-fixed-cost businesses support 2 or 3. That is the real answer to 'how much debt'.
   4. Then the market-timing and signalling layer. Issuing equity signals management thinks the stock is fully valued, which is why equity raises are usually met with a price fall. Pecking order theory formalises this: internal cash first, then debt, then equity last.
   5. Use of proceeds matters. Funding a contracted asset with a 20-year life argues for long-dated debt matched to it. Funding an uncertain growth push or an R&D pipeline argues for equity, because you cannot service fixed obligations with uncertain cash flows.
   6. And there is a middle: converts, hybrids, preferred and PIK. A convertible raises cheap coupon money by selling equity upside; a hybrid gets partial equity credit from the agencies. Naming that middle ground is what a corporate banking interviewer is listening for.

   Where candidates lose it

   Answering 'debt is cheaper' and stopping. Everyone says that. The differentiating content is the capacity constraint — rating, covenants and cash flow volatility — and the hybrid middle ground. Also, do not forget that the answer changes entirely when the market is shut.

   Expect next

   • How much debt can that business actually carry?
   • Why does the share price usually fall on an equity raise?
   • What is a hybrid and why does the agency give it equity credit?

   Reported by candidates at Scotiabank (Corporate Banking, London, 2026). Source: Wall Street Oasis.

5. 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.

6. 087What is an NCD, and how does a public NCD issue work in India?Indian debt marketsCoretechnicalIndian debt capital marketsCorporate banking

   Say this

   An NCD is a non-convertible debenture — a plain corporate bond under Indian law, so called to distinguish it from convertible debentures. It can be secured or unsecured, and it is issued either by private placement to institutions, which is most of the market, or by a public issue to retail investors under SEBI's debt listing regulations.

   Then walk it

   1. The private placement route is the market: a company with a board and shareholder authorisation issues to up to 200 identified investors per financial year per class, executes a debenture trust deed, and now must bid it on the electronic bidding platform above a size threshold. Listing on NSE or BSE follows, and settlement is through the depositories.
   2. The public issue route is what retail investors see. It needs a SEBI-filed prospectus, a credit rating, a debenture trustee, a minimum subscription, a fixed subscription window of a few days, and allocation across reserved categories — institutional, non-institutional, high net worth individual and retail.
   3. Who uses public issues: mainly NBFCs and housing finance companies, because they need retail funding and can offer coupons a few hundred basis points above bank deposits. Retail NCD issues from names like the large gold loan and vehicle finance NBFCs are a regular feature of the market.
   4. Secured versus unsecured matters here more than in a developed market. A secured NCD carries a charge over specific assets or a floating charge on receivables, with security cover — commonly 1 to 1.25 times — maintained through the life and certified periodically. Unsecured NCDs, especially subordinated ones that count as Tier II capital for an NBFC, are a different credit entirely.
   5. The trustee has real teeth post-2020 reforms: SEBI strengthened debenture trustee obligations on security creation, monitoring and enforcement after several defaults where security turned out to be incomplete.
   6. The risk to say honestly: a retail investor buying a 10 or 11 percent NCD from an NBFC is taking genuine credit risk at a rating that may be AA or lower, and the IL&FS and DHFL defaults showed what that means. High coupon in the Indian retail market is a credit signal, not a bargain.

   Where candidates lose it

   Treating an NCD as an exotic instrument. It is just a corporate bond, and the useful content is the private placement versus public issue distinction, the security cover mechanic and the trustee's role. Naming the NBFC defaults shows you understand why the retail investor protections were tightened.

   Expect next

   • Why do NBFCs dominate the retail NCD market?
   • What is security cover and who certifies it?
   • How is NCD interest taxed for a retail investor?
7. 093Why debt capital markets rather than M&A or equity capital markets?FitCorephone / first roundSyndicate desks

   Say this

   Because DCM is a markets seat that sits inside a client franchise, and that combination is what I want. You are pricing something every day against a live market, and you are advising a treasurer on a capital structure decision that recurs. M&A is episodic and slower; ECM is closer to the market but a far smaller share of what a company actually does.

   Then walk it

   1. Lead with the work, not the lifestyle. The daily rhythm is what distinguishes DCM: a morning market read, comparable pricing, live book updates, and a decision that gets made and validated within hours. If that appeals, say so specifically.
   2. The frequency point is genuinely persuasive. A company does one transformational acquisition a decade and refinances every two or three years, so a DCM relationship is continuous. That means you learn the credit and the treasurer properly rather than parachuting in.
   3. The technical draw: capital structure, ratings, covenants and relative value across instruments. It is a different skill set from valuation, and it compounds — after three years you can look at a term sheet and know what is off-market.
   4. Then the honest comparison. M&A gives you deeper single-transaction work and better optionality into private equity. ECM is a similar franchise model in equities. Acknowledging what you give up makes the choice sound considered instead of rehearsed.
   5. Then the evidence that you did not just decide this last week. A specific deal you followed and why the structure interested you, a modelling or credit project, a society or internship, a bond you tracked. Interest with no evidence is just a preference.
   6. Close with where you want to go: syndicate, leveraged finance, private credit, a treasury seat. DCM has a clear set of next steps and naming one shows you have thought past the internship.

   Where candidates lose it

   Saying you prefer DCM because the hours are better. Every interviewer has heard it, it is only partly true, and it tells them your interest is in avoiding something rather than doing this. Lead with the market rhythm and the recurring client relationship.

   Expect next

   • What would you find frustrating about DCM?
   • Which product within DCM interests you most?
   • Why not go straight to a credit fund?
8. 095Where do you see yourself in five years?FitCoresuperdayApollo Global ManagementCredit · New York · 2025

   Say this

   Give a direction rather than a title, and make it consistent with the seat you are interviewing for. Something like: still in credit, running my own names, with enough of a sector to have a genuine view rather than being handed a model to fill in. Then say what you would need to learn to get there.

   Then walk it

   1. The question is really testing two things: whether you understand the path in this business, and whether your plan ends at their firm or uses it as a stepping stone. Answer both.
   2. Show you know the ladder. In a credit fund it is analyst, then covering names with the team, then underwriting independently and sitting on investment committee. At a bank it is analyst, associate, then either a coverage or a product specialism. Naming the actual progression is what shows you have talked to people who do the job.
   3. Be specific about capability, not rank. 'Able to underwrite a deal end to end and defend it in committee' is better than 'a vice president', because the first is about the work.
   4. Do not say business school or private equity if you are interviewing at a credit fund that expects you to stay. If you are genuinely open, frame it as wanting depth in one asset class rather than a plan to leave.
   5. And do not overclaim. Saying you will be running a desk in five years reads as either arrogant or uninformed about the timeline.
   6. Close by connecting it to them: what specifically about their platform would get you there. The strategies they run, the deal flow, the fact that analysts cover names rather than staff models.

   Where candidates lose it

   Naming a title with a date, or saying business school. The first sounds either arrogant or naive about timelines; the second tells a fund that expects retention that you are treating them as a two-year stop. Talk about the capability you want and why their platform builds it.

   Expect next

   • Why not business school?
   • What would you need to learn first?
   • What if you are still doing the same thing in five years?

   Reported by candidates at Apollo Global Management (Credit, New York, 2025). Source: Wall Street Oasis.

9. 098What do you think a DCM analyst actually does all day?FitCorephone / first roundSyndicate desksCorporate banking

   Say this

   Mostly market monitoring, comparable pricing analysis and client materials — not modelling. A typical day is the morning market update, updating comps and issuance screens, building or refreshing pitch materials on refinancing options, and on a live deal, tracking the book and the secondary performance.

   Then walk it

   1. The recurring work: a daily or weekly market update for clients and internal use, covering issuance volumes, spread moves, the forward calendar and fund flows. Juniors own this, and it is genuinely how you learn where the market is.
   2. Comparable financings analysis: pulling recent deals for similar credits, similar tenors and similar structures, and building the relative value case for where the client should price. This is the analytical core of the job, and it is closer to market research than to valuation modelling.
   3. Client materials: refinancing option analyses, rating agency presentations, maturity profile charts, debt capacity analyses, and pitch books for a mandate. A lot of it is PowerPoint, and pretending otherwise is not credible.
   4. On a live deal: helping with documentation comparison, tracking the order book, drafting the announcement, and after pricing, monitoring secondary performance. The tempo is intense for a day or two rather than sustained for weeks.
   5. What it is not: a modelling seat. There is credit and debt capacity modelling, but nothing like the three-statement and LBO work in M&A or leveraged finance. If you want that, leveraged finance is the closer seat, and saying so honestly is better than pretending.
   6. And the thing to add that shows you have actually asked someone: how much of the job is internal coordination — ratings, legal, syndicate, coverage, compliance — and that the analyst is often the one holding those threads together.

   Where candidates lose it

   Describing it as modelling and valuation. It is not, and an interviewer who does this job will notice immediately. The honest answer — market monitoring, comps and materials, with intense bursts around live deals — reads as someone who has spoken to people in the seat.

   Expect next

   • So why not leveraged finance if you want the modelling?
   • What part of that would you find least interesting?
   • How is the day different from M&A?
10. 099Our process starts with online testing — personality, numerical reasoning and language. How do you approach that?FitCorephone / first roundGolub CapitalLeveraged Finance · Chicago · 2015

    Say this

    Treat the reasoning sections as a preparable skill and the personality section as a consistency test. Practise timed numerical and verbal reasoning until the format is automatic, because the constraint is speed and not difficulty. On the personality inventory, answer consistently and honestly, because inconsistency is what gets flagged.

    Then walk it

    1. Numerical reasoning is arithmetic and data interpretation under time pressure — percentages, ratios, reading tables and charts. The maths is straightforward and the time is not, so practice is about pattern recognition and mental arithmetic, not learning new content.
    2. Verbal and language sections are usually inference from a passage: whether a statement is true, false or cannot be determined on the passage alone. The single biggest source of error is using outside knowledge instead of the text.
    3. Logical or inductive reasoning sections are pattern sequences. They are the most obviously trainable of the lot, and twenty practice sets makes a visible difference.
    4. The personality inventory is not a test you pass by guessing what they want. The scoring looks for internal consistency across repeated items phrased differently, so trying to present an idealised profile usually produces a flag. Answer honestly and quickly.
    5. Practical preparation: use the specific test provider's own practice materials if you can identify them, do them under real time limits, take them on a proper screen with a calculator and paper to hand, and do not attempt them at 1am.
    6. And say the obvious professional thing: do it yourself. Firms increasingly retest at assessment centre, and a gap between the online score and the in-person performance is a serious problem.

    Where candidates lose it

    Treating the assessment as an afterthought, or trying to game the personality inventory. The reasoning sections screen out a large share of applicants purely on unfamiliarity with the format, and inconsistent personality answers get flagged. Practise timed, answer honestly, and do it yourself.

    Expect next

    • Which section would you find hardest?
    • How would you prepare in a week?
    • How do you feel about being retested in person?

    Reported by candidates at Golub Capital (Leveraged Finance, Chicago, 2015). 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.