Financial Modelling

The Loan Life and Project Life Cover Ratios


Next to the DSCR, two further key financial ratios are commonly used and tested in project finance transactions, i.e. the Loan Life Cover Ratio (LLCR) and the Project Life Cover Ratio (PLCR). Both ratios are regularily calculated as the ratio of A to B, whereas

A = The net present value of the Available Cash Flow for the loan period / the project life, discounted at the weighted average interest rate of the senior loan facilities, plus the outstanding balances of relevant accounts (without double counting) on the respective calculation date

B = the total notional of the senior loan facilities outstanding on the applicable calculation date.

Available Cash Flow usually is calculated as

  • net operating revenues, insurance proceeds, interest on reserve accounts and working capital decreases, less
  • project operating costs and working capital increases.