Investment Banking
Prepalyst has 22 leveraged finance interview questions with model answers, covering credit statistics, capacity analysis, flex terms and syndication risk. Every question is graded on technical accuracy, completeness and interview communication. Practice is free.
A quick model-review test for a leveraged-finance analyst.
A borrower generates $90m EBITDA, pays $24m of cash interest, $18m of cash taxes, and $20m of maintenance capex. It has a 50% excess-cash-flow sweep and begins with $10m excess cash after working capital. How much term…
A quick sizing exercise for leveraged finance screens.
A company has $80m of EBITDA. The market can support 4.0x secured debt and 5.5x total debt. How much secured and unsecured debt can it raise?
Levfin desks ask this because leverage depends on adjusted EBITDA, not just reported EBITDA.
What are EBITDA addbacks, and why do lenders care so much about them?
A standard product comparison in leveraged finance interviews.
Compare a leveraged loan with a high-yield bond.
A mechanics question for acquisition financings.
What goes into sources and uses for a sponsor acquisition financing?
A first-round product question for analysts staffing an acquisition financing.
Compare a Term Loan A with a Term Loan B. Why would a sponsor-backed borrower use both?
A basic fit question for leveraged finance analyst interviews.
What does a leveraged finance group do, and how is it different from debt capital markets?
Acquisition financings often rely on bridge commitments before permanent debt is placed.
What is a bridge loan in leveraged finance?
A staffer asks an analyst to prepare a lender presentation after a sponsor announces an acquisition.
You are preparing the first lender presentation for a sponsor-backed acquisition. What do you need to validate before marketing the financing, and what would you put in the materials?
Asked to test whether candidates understand investor reinvestment risk.
What is call protection and why do debt investors care about it?
A key documentation concept in the institutional loan market.
What does covenant-lite mean, and why do investors accept it?
A common follow-up to leverage sizing.
A company has $100m EBITDA and $500m debt priced at 10% cash interest. What is interest coverage, and is it comfortable?
A process question on how committed financing becomes distributed risk.
Walk me through the leveraged loan syndication process.
A leveraged loan pricing question.
A loan has a 9% coupon and is issued at 96 OID. Why does the OID matter to investors?
Mandatory for private equity interviews and standard in investment banking.
Walk me through a leveraged buyout model from start to finish.
A leveraged-finance analyst must turn scattered sponsor and lender comments into an actionable underwriting response before syndication.
At 6:45am, the lead underwriter asks for a response before the financing launch call. The sponsor wants leverage unchanged despite weaker trading. Prioritise each reply and prepare a concise recommendation to the deal…
The question a leveraged finance desk answers before committing capital.
A sponsor asks you to underwrite the debt for a buyout of a business with $150m EBITDA. How do you determine how much debt it can carry, and what would make you say no?
A harder levfin question on where underwriting losses actually come from.
A bank commits to a $2bn leveraged financing. Markets sell off and investors only want the debt at 90. What happens?
Asked to test whether you understand where a leveraged finance desk actually loses money.
What is market flex, and what happens to the bank if a committed financing cannot be syndicated?
A leveraged-finance analyst review before an underwriting committee discussion.
A first-year analyst has prepared the debt-sizing case for a sponsor acquisition of a packaging distributor. Find the errors that change debt capacity or returns, protect the underwriting timeline, and draft the note you…
A leveraged-finance underwriting case where sponsor-friendly documentation changes the lender's exit protection.
A sponsor asks for debt that can remain outstanding after a change of control if leverage is below a portability threshold. What must the underwriting team test before accepting the request?
A sponsor asks the bank to finance a dividend recap eighteen months after closing.
A sponsor-owned company has reduced debt from $600m to $480m while EBITDA rose from $100m to $120m. The sponsor wants $180m of new debt to fund a dividend. Would you recommend underwriting it?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Firm names indicate where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with the firms named.