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Infra Advisory Ltd
Infra Advisory Ltd
Financial Modelling

Reserve Accounts

Posted 20182018 Admin

Cash accounts, like the Debt Service Reserve Account (DSRA) or the Maintenance Reserve Account (MRA) are regularly required by banks as an additional means of security within a project finance transaction. The idea is to provide for an additional cash buffer in case either debt service or major maintenance expenses can not be funded due to short-term operating cash flow deficiencies.

Regularly, within a term sheet, the DSRA has to be funded up to an amount of 50% of the aggregate of the scheduled principal and financing costs due and payable over the next 12 months.

The MRA usually looks into the future even further, with its minimum funding requirement often defined as the aggregate of

  • Months 0-12: 100% of the major maintenance costs for such forecast period
  • Months 13-24: 66.67% of the major maintenance costs for such forecast period
  • Months 25-36: 33.33% of the major maintenance costs for such forecast period

 

 

cash accountdebt serviceDebt Service Reserve AccountDSRAmaintenance costsMaintenenace Reserve AccountMRAsecurity

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About Project Finance

  • The Debt Service Coverage Ratio
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  • General Structure of our Project Finance Model
  • The Loan Life and Project Life Cover Ratios
  • Key Performance (Risk) Indicators for Wind and Solar PV Projects
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authority best practice bond cash flow CEE checks conditions precedent confidence covenant CP debt service decision making distribution DSCR equity error free excel financial close financial model financial test financing agreement finanzmodell infrastructure bond key parties LLCR margin MLA no circular reference optimization PLCR PPP procurement project finance loan ratio reporting risk scenario security sensitivity sponsors stakeholder standard term sheet trust user manual