HH #14

U.S. credit rating downgrade from AAA to AA+. What does this mean and why will it matter for your interviews?

Fitch’s downgrade of the U.S. credit rating comes on behalf of high inflation (may not be the case anymore with July posting YoY CPI increase of only 3.2%) and expanding government deficit (dodged a bullet a month ago). Essentially, Fitch believes the U.S. government is going to be LESS likely to meet its debt obligations in the future. However, a AA+ credit rating is still extremely creditworthy and from a corporate perspective, has a very low probability of default.

The U.S. has been downgraded in the past and has always risen back to the coveted AAA rating. However, let’s think about what would happen if the U.S. were to default.

If the U.S. were to default on its debt, every single U.S.-based corporation would also be considered ‘riskier’ leading to….. a higher cost of capital (because the risk-free 10-yr T-bond will no longer be ‘risk-free’) which leads to…. a smaller PV on expected cash flows which leads to….smaller enterprise values for all U.S. corporations. Investors generally don’t like when a company becomes smaller or riskier, therefore a mass selloff would be sure to ensue.

For your interviews, think through the waterfall effect of riskier rates and the resulting impact on valuation. Also, for general practice, challenge yourself to quickly digest high-level information and walk through its spider-web effect on your areas of interest. This is an overlooked skill that is important to showcase employers that you would be a solid analyst/associate.

Banking: More full-time applications have been released over the last two weeks. Deutsche, PWP, Qatalyst, and multiple MM boutiques opened up their apps with quick deadlines. As always, apply early and often to give yourself the best chance of landing a role. For SA, many MM boutiques opened up their apps including Davidson Capital, Howden Tiger, and Regions Bank. U.S. Bank also opened up its app.

Consulting:

More companies postponing start dates and some (like Bridegspan) even postponing hiring.

All big 4 firms (except KPMG) have released summer intern positions and are hiring on a rolling basis but will be taking less people this summer.

Smaller/Niche firms will release applications in September

Buyside: Big update for the buyside. KKR finally opened their 2024 SA role alongside many smaller shops like TZP Group and Teamworthy Ventures.

We want to connect with your institution’s finance/consulting/business clubs!

For those of you who are leaders or members of your school’s finance/consulting/business clubs, we would really appreciate an introduction to share our services with your peers. As a sweetener, we will delegate you as a HoosHelpers Campus Ambassador! Always a good look on the resume. Please reach out if you are willing to extend an introduction!

LinkedIn Promotion: HH is officially on LinkedIn: HoosHelpers and we would love it if you guys tag us upon receiving your phenomenal job offers! You tag us and we send you $5 as a thanks. On LinkedIn, we post weekly tips/things to consider related to the job market.

Refer a friend and receive $5! Every friend you refer who purchases our services = $5 in your pocket.

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Happy to help,

Hoos Helpers

HH #14