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. 020What is SOFR, and where is it right now?Yield curve and ratesCorephone / first roundBain CapitalGeneralist · Boston · 2023

   Say this

   SOFR is the Secured Overnight Financing Rate — the volume-weighted rate on overnight Treasury repo, published by the New York Fed. It replaced USD LIBOR as the floating benchmark for loans and derivatives. Quote the current level with the date, because it tracks the Fed's target range almost exactly.

   Then walk it

   1. It is secured and transaction-based, which is the whole point. LIBOR was an unsecured rate based on submitted estimates, which is what made it manipulable and what killed it.
   2. Because it is secured, SOFR sits slightly below where unsecured bank funding would, and it carries no bank credit component. That is why loan documents add a credit spread adjustment, historically around 10 to 26 basis points depending on tenor, when they transitioned from LIBOR.
   3. Loan markets use Term SOFR, a forward-looking 1, 3 or 6 month rate, because borrowers need to know their coupon at the start of the period. Derivatives mostly use compounded overnight SOFR in arrears.
   4. Where to find the number: the New York Fed publishes SOFR every morning at 8am Eastern, and CME publishes Term SOFR. Know today's level and the Fed's target range, and say them with the date.
   5. The quirk worth knowing: SOFR spikes at quarter and year end when repo balance sheets tighten. The September 2019 repo blowup is the extreme case, and it is why the Fed built the standing repo facility.
   6. How to answer if you genuinely do not know the level: say the mechanism, say it tracks the effective fed funds rate within a few basis points, and say the target range. Never guess a precise number.

   Where candidates lose it

   Not knowing the current level. This is a five-second check on whether you follow markets, and on a credit desk where every loan coupon is SOFR plus a spread, not knowing it is disqualifying. Refresh it the morning of the interview, and say it with the date.

   Expect next

   • Why did LIBOR get replaced?
   • What is the credit spread adjustment?
   • What is the difference between Term SOFR and SOFR compounded in arrears?

   Reported by candidates at Bain Capital (Generalist, Boston, 2023). Source: Wall Street Oasis.

2. 021Describe Jerome Powell's tenure at the Fed.Yield curve and ratesIntermediateevery roundMizuhoInvestment Banking · New York · 2026

   Say this

   Structure it in phases rather than opinions: the normalisation attempt, the pandemic response, the inflation misjudgement and the fastest hiking cycle in forty years, then the disinflation and the path back down. Then say what each phase did to debt markets, because that is the part they actually want.

   Then walk it

   1. Phase one, 2018 to 2019: raising rates and shrinking the balance sheet, then reversing after the late-2018 risk selloff. That established the pattern of responsiveness to markets that critics call the Fed put.
   2. Phase two, 2020: the pandemic response, which for a debt desk is the important one. Rates to zero, unlimited Treasury and mortgage purchases, and for the first time facilities buying corporate bonds and ETFs. Investment grade spreads went from about 400 back inside 150 in months, largely on the announcement.
   3. Phase three, 2021: the framework shift to average inflation targeting and the 'transitory' call. Inflation ran to roughly 9 percent on headline CPI before the Fed moved decisively. That is the credibility cost of the tenure.
   4. Phase four, 2022 to 2023: 525 basis points of hikes in about 18 months, the fastest since Volcker. That repriced every fixed income asset, produced the worst bond year on record, and broke the banks that had duration mismatches, which is Silicon Valley Bank.
   5. Phase five: disinflation without the recession most people expected, then the careful walk back down. Whether that is skill or luck is genuinely contested, and saying so is better than picking a side.
   6. Bring it home to the desk: this tenure taught the market that the Fed will backstop credit markets in a liquidity crisis, and that duration risk is real. Both of those shape how issuers and investors behave today.

   Where candidates lose it

   Giving a political opinion, or a vague 'he handled COVID well and inflation badly'. Structure it in phases, attach one number to each, and finish with the implication for debt markets. Never editorialise about whether he should be replaced.

   Expect next

   • What did the corporate bond facilities actually do to spreads?
   • Was the soft landing skill or luck?
   • How did the 2022 hiking cycle affect bank balance sheets?

   Reported by candidates at Mizuho (Investment Banking, New York, 2026). Source: Wall Street Oasis.

3. 022If CUSMA negotiations fall through this summer, what is the impact to the Bank of Canada?Yield curve and ratesHardtechnicalTD SecuritiesDebt Capital Markets · Toronto · 2026

   Say this

   It pulls the Bank in two directions at once, which is the whole point of the question. A trade breakdown is a large negative demand shock to Canadian growth, which argues for cuts, but tariffs and a weaker Canadian dollar push import prices up, which argues against. The Bank would likely cut and lean on the growth side, while flagging the inflation risk.

   Then walk it

   1. The growth channel is direct and large. Roughly three quarters of Canadian goods exports go to the United States, so tariffs or loss of preferential access hits manufacturing, autos and energy hard, and business investment freezes on the uncertainty alone.
   2. The inflation channel runs the other way. Tariffs raise input costs, and the loonie weakens on a worse terms-of-trade outlook, which raises the price of imported goods in Canadian dollars. That is a supply shock.
   3. A central bank facing a supply shock has to judge whether the price rise is a one-off level effect or feeds into expectations. If expectations stay anchored, you look through it and support demand. That is the Bank's stated approach.
   4. So the likely read: cuts, possibly faster than the market currently prices, with the communication emphasising that the inflation impulse is transitory and the output gap is opening.
   5. The complication is the exchange rate and the policy gap with the Fed. Cutting well below US rates weakens the loonie further, which imports more inflation. That constrains how far the Bank can go unilaterally.
   6. For a Toronto DCM desk the practical consequence: the Canadian curve steepens as the front end rallies on cuts, provincial and corporate spreads widen on the growth shock, and the new issue window for anything trade-exposed shuts.

   Where candidates lose it

   Answering with one direction only. The interviewer picked this because it is a growth-versus-inflation conflict, and the mark is for identifying the trade-off and then taking a view with a reason. Also, do not guess at treaty detail you do not know — reason from trade share and the two channels.

   Expect next

   • Which channel dominates, and why?
   • What does that do to the Canadian curve?
   • How does the policy gap with the Fed constrain them?

   Reported by candidates at TD Securities (Debt Capital Markets, Toronto, 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.