The Debt Service Coverage Ratio

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Financial tests, such as the Debt Service Coverage Ratio (DSCR) test not only is used within credit documentation as a warning mechanism to determine and monitor the project performance and the likelihood for debt repayment. It also is a key metric in order to control and restrict dividends and other distributions to project sponsors. Further, […]

General Structure of our Project Finance Model

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The general structure of our project finance model is illustrated in the diagram below: One of the essential elements of our project finance model is that different calculations are made for distinct phases of the respective project – the development phase, the construction phase and the operation phase together. The sources and uses statement is […]

The Loan Life and Project Life Cover Ratios

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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 […]