Project Finance Debt Ratios & Sculpting (DSCR LLCR PLCR)

Name: Project Finance Debt Ratios & Sculpting (DSCR LLCR PLCR)
Rating: 4.7 (8 reviews)

Say "Goodbye!" to spreadsheet errors and confusion with the help of this special laser-focused course!

Created byDealMaker Financial Training

Last updated 7/2024

English

What you'll learn

You will understand high-level objectives of using project finance debt ratios
Understand difference between 'descriptive' and 'prescriptive' ratio use
Understand the different risk information communicated by ratios
You will master the hardest ratio of them all - the LLCR!

Course content

3 sections • 22 lectures • 1h 53m total length

Introduction6:34
Master essential project finance concepts by demystifying debt ratios—DSCR, LLCR, and PLCR—through math, intuition, and practical Excel demonstrations that streamline modeling and lender risk understanding.
The 'Golden Rule' of Project Finance!3:17
Follow the golden rule: read and model exactly what's in the legal documents, because terms binding debtors and creditors dictate DSCR, LLCR, PLCR, and debt sculpting.
The big picture: what is it all about?3:17
Assess how to forecast infrastructure cash flows, scale them into a safe debt repayment plan, and use DSCR, LLCR, and PLCR to measure and structure debt repayment performance.

CFADS4:37
Understand CFADS, cashflows available for debt service, as cash revenues less essential cash expenses and taxes, measuring a project's ability to service debt and its link to DSCR.
DSCR4:27
Explore the debt service coverage ratio (dscr) by calculating cfads divided by debt service, using an Excel model with a fixed payment schedule, tax simplifications, and qualifying cfads.
The first LLCR8:45
Explore the loan life coverage ratio (LLCR) in project finance, comparing the net present value of future CFADS discounted at loan interest to outstanding principal, with Excel practice.
The first LLCR - in Excel3:46
Calculate the first llcr in excel by explicitly deriving the npv of future cfads using discount factors, then divide by the closing debt balance.
The rolling LLCR6:20
Explore how rolling llcr uses period-specific npvs and rebased discount factors to provide a dynamic, period-by-period view of debt service coverage.
The rolling LLCR - by backwards induction9:18
Learn the rolling LLCR via backwards induction, deriving NPV from the end state and discounting back through early periods using CFADS and discount factors.
Timing pitfalls to avoid using the LLCR2:46
Identify timing pitfalls in LLCR calculations and compare them to DSCR, emphasizing forward-looking CFADS. Avoid beginning-of-period references and end-of-period balance concepts to better spot issues in others’ models.
LLCR for break-even, and restructuring analysis18:17
Explore how LLCR informs break-even and debt restructuring by comparing dream versus reality CFADS, with NPVs, sensitivities, and debt service across distress scenarios.
PLCR2:03
Understand how the PLCR, a cousin of the LLCR, measures extra repayment coverage using the present value of additional cash flows and post‑loan discount factors.
Ratio math DEEP DIVE!10:10
Understand how DSCR, LLCR, and PLCR relate. When DSCRs are equal, the first LLCR equals the average DSCR, and when DSCRs are similar, LLCR is approximately the average DSCR.

Introduction to debt sizing1:16
Use ratios to measure debt and repayment performance relative to cash flows available for debt service (CFADS), then apply them prescriptively in Excel to structure debt sizing.
Sizing and sculpting with DSCR, under fixed payments3:00
Determine maximum debt service and loan size under fixed six-year payments by applying the minimum CFADS and a 1.3x DSCR using a closed-form PMT-like solution.
Introduction to sculpting4:34
Examine how cashflow volatility impacts debt sizing through sculpting debt service to CFADS. Learn the discounting method first, with backwards induction for rare edge cases.
Sizing and sculpting with variable cashflows - NPV method4:32
Explore sizing and sculpting debt with variable cash flows using the NPV method. Discount future debt service to present value to determine loan principal and align repayments with forecast CFADS.
Sizing & sculpting with variable cashflows - by backwards induction9:59
Explore why discounting debt service can hide interest coverage shortfalls with irregular cash flows, and use backwards induction to diagnose and fix debt service schedules.
Key variable relationships for sizing and sculpting0:56
Explore how cfads raise cash for principal and increase initial loan size; longer terms or higher dscr sculpt debt service into smaller payments.
Working with maximum leverage constraints3:40
Learn how maximum leverage constraints cap debt sizing and sculpted debt service, and apply a simple scaling method to align loan size with the leverage limit while maintaining coverage.
Rescaling of debt-service as stakeholder-neutral solution1:07
Explore rescaling debt service as a stakeholder-neutral solution by adjusting sculpting dscrs. See how cfads performance adds coverage and llcr rescaling works when dscrs are equal, using maximum leverage.
BONUS LECTURE0:38
Deepen your theory and modeling concepts for dscr, llcr, and plcr in project finance debt ratios, enabling you to think clearly and efficiently about real-world problems.

Requirements

Some familiarity with project finance / non-recourse debt

Description

Project Finance models are among the most complicated spreadsheet models in the whole of finance.

You have to deal with complexity on several fronts, and your prior experience outside of the field may have done little to prepare you for it.

Most project finance courses will serve you the entire skillset and theory you need as a modeler, all at once. But for many analysts I have spoken to, that is simply too much information at once. And in a well-intentioned effort not to overload students, course-makers end up leaving out many significant details.

This course takes a different approach.

It gives you a narrow, laser-focused examination of issues that are central to any project finance deal:

How much debt is going loaned to the company?

How is it going to be paid back?

Project finance models answer critical questions with mathematical procedures centred on project finance debt ratios.

This course will look at all the project finance ratios, along with mathematical explanations about how, and why they work… (instead of asking you to just copy them and trust that they do.)

You will finally gain clear-minded understanding, and be able to spot and avoid errors that trip other analysts up... and which may even be lurking in the model you have inherited.

All this will help you work, faster, more confidently, with lower risk of error - a great reward for your investment.

Who this course is for:

Junior analysts, associates, (and any seniors getting back into modelling work!)

Project Finance Debt Ratios & Sculpting (DSCR LLCR PLCR)

What you'll learn

Explore related topics

Course content

Introduction3 lectures • 13min

Descriptive use of debt ratios10 lectures • 1hr 10min

Prescriptive use of debt ratios for debt sizing and sculpting9 lectures • 30min

Requirements

Description

Who this course is for: