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, […]
A prerequisite for understanding and making business decisions is to understand its financial consequences. For a proper understanding it is necessary to consider alternative options, to analyse various scenarios of key input variables and to perform sensitivity analyses of output data to changes in input data. Financial models are used to explore all such aspects […]
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 […]
Financial models are the most integral part of any infrastructure finance transaction. For example, in many infrastructure transactions, the maximum debt amounts will be subject to adjustments which reflect the final sizing of a borrower’s debt requirements on the basis of a final financial model run reflecting updates of the underling base rate setting. As […]
A term sheet will usually include the following commercial items, which are the key subject matter in a debt raising process:
Typical financial modelling mistakes include Forgetting to copy formulae right-across all columns Inserting a constant (hard-plug) in a calculation sheet (for „comfort“ reasons) and forgetting to replace it with a link / formula Sums are wrongly built (esp. after inserting rows at the top or at the bottom of the area to be summed up) […]
With increasing complexity in the infrastructure finance sector, it is now common practice not only for the financial modeller and transaction executives but also for CEOs, CFOs, investment officers and board members to take more of a hands-on role in using financial models. However, a financial model should not only be built for internal purposes […]
Project finance is driven by various dates that determine when various cash flows occur, e.g. cash outflows for development and construction, cash inflows from equity and debt holders, cash outflow for debt service etc. A project finance model for e.g. a renewable energy project will therefore in detail cover the following three critical phases, i.e. […]