2 questions reported in King Street Capital Management interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
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Recovery analysis, capital structure relative value and covenant leakage. 2 questions
Credit hedge fund interviews use this to test whether a candidate recognises that creditor downside depends on documents as well as EBITDA.
A borrower has stable EBITDA and adequate liquidity, but its bond indenture permits large dividends to the sponsor. Why should a credit investor care, and what would you review before buying the bond?
A relative-value interview question for a credit fund that trades both cash bonds and CDS.
An issuer's one-year CDS trades at 1,200bp while five-year CDS trades at 750bp. What is the market signalling, and how would you decide whether to buy near-term protection, sell it, or express the…
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
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