I have an informal interview/ phone call coming up next week regarding a credit risk analyst position that I inquired about. My problem is that I have only theoretical knowledge of credit risk analysis - my actual risk management experience is from currency and operational risk jobs. The company is great, I think the job is interesting and credit risk analysis is something that I find more interesting that what I’ve been doing so far. How would you approach the interview?
What area of credit risk is this like corporate fixed income, corporate banking, more high level like market risk type stuff or loan portfolio risk, etc?
It’s for a government-related agency/company that provides financing to midcap companies wanting to enter into new markets. The team does the credit risk analysis on the companies to evaluate their creditworthiness.
So the basics to look for, you’re going to have some idea:
Overall credit analysis:
- Management / organizational history / past M&A / major ownership
- Cyclicality
- Revenue & Growth
- EBITDA & EBITDA Margin
- Leverage (Debt / EBITDA), keep in mind any large unfunded pension balances if it’s industrial
- Liquidity (Debt profile vs Cash + Revolver [note revolver maturity as well as any restrictive covenants])
- Cash profile (OCF, CAPEX, FCF)
- Uses of cash / returns of cash to shareholders (dividends & repurchases)
Then specifically you’ll want to look at the market they’re planning on entering:
- Cash / investment needs
- Percentage of business capital and revenue (how proportionately large is this gamble)
- Risks and competitive profile of the industry
- Crossover expertise (does this touch on any core competencies)
If you have access to a BB terminal and or any credit reports on examples within the industry those might be useful
Thanks a lot for the input!