Portfolio Monitoring interview prep.

Behavioural questions to expect

1. Walk me through your CV.
2. Walk me through your most impressive project — ideally one with credit-surveillance, valuation, or workout depth.
3. Tell me about a weakness, a failure, or feedback you've received and worked on.
4. Why direct-lending portfolio monitoring — why not origination?
5. Why the firm?
6. Why are you leaving current role at current firm?
7. Talk me through the firm's held loan book — what's in it, where's the watchlist, and what would you be watching closely?
8. How does the firm's portfolio monitoring + watchlist process actually work in practice?

Technical concepts to master

• Three financial statements — connections you'll be probed on

  Income statement (IS) overview · Balance sheet (BS) overview · Cash flow statement (CFS) overview · Statement connections — the canonical question · Prepaid expense scenario

• LBO fundamentals — capital structure and returns

  LBO structure · Returns drivers — the three sources · Capital structure — debt tranches · Paper LBO — the simplified math · Cash flow available for debt repayment

• The three core valuation methodologies

  Discounted Cash Flow (DCF) · Public Company Comparables (Comps) · Precedent Transactions · When each is most relevant · Methodologies you specifically would NOT use

• Watchlist, amendment, and workout playbook

  Watchlist categories · Amend-and-extend (A&E) · Equity cure · Workout / restructuring

• Fund-level credit reporting: yield, losses, NAV, and leverage

  Weighted-average yield (unlevered) · Non-accrual rate + net loss rate · Levered yield + fund leverage · NAV per share + NII (BDC)

• Loan fair-value process: ASC 820, IFRS 13, IPEV guidelines

  ASC 820 (US) and IFRS 13 (international) · IPEV valuation guidelines (debt) · Calibration · Valuation committee + independent provider

Practical drills

• A held senior secured loan: $200m par, SOFR+550 with 1.0% SOFR floor, OID 2% at close 18 months ago, 5-year original tenor (3.5 years remaining), no amortization. The borrower remains performing with ~25% covenant headroom. Comparable new-issue spreads have widened by 75 bps since close. What's the quarterly mark, and what level?
• A direct-lending vehicle holds $2.0bn at fair value across 50 loans. Weighted-average all-in yield is 11.5% at cost. $80m of loans are on non-accrual. Realized losses last year were $20m. Fund-level leverage is 0.75x debt-to-equity at a 6.0% cost of debt. (a) Compute non-accrual rate. (b) Approximate net loss rate. (c) Approximate levered yield. (d) Frame the net return to the LP.
• You're presenting a held loan at the firm's monthly credit committee watchlist review. The borrower is on category 3 (watchlist). 5 minutes. What's in the pack, what's your structure, and what does the credit committee most want to hear?

Smart-question anchors

• Quarterly mark process — methodology, sign-off, off-cycle triggers
• Watchlist framework — categories, escalation triggers, how often names move
• Amendment + workout playbook — how the firm handles a deteriorating credit
• Fund-level reporting cadence — BDC 10-Q vs LPAC vs ILPA template
• Independent valuation — frequency, provider used, audit cycle

Sourced from

International Private Equity and Venture Capital Valuation Guidelines (IPEV) · Institutional Limited Partners Association (ILPA) Reporting Template · Mergers & Inquisitions / Breaking Into Wall Street — Private Credit Portfolio Monitoring · Wall Street Oasis — Private Credit Portfolio Monitoring threads · Cambridge Associates — Private Credit Strategies + LCD Leveraged Lending data