Peek over an expert’s shoulder and get the skills you need to succeed in project finance. Learn how to build best practice project finance models suitable for all industry sectors. Develop checklists for key stages of the project financing process and get tips and tricks on project life cover ratio, cash sweep analysis, CFADS, debt sculpting to target DSCR, mezzanine debt, DSRA, MMRA, LLCR and other elements related to project finance.
Most Popular Tutorial
By Nick Crawley
There are two different ways to calculate the average DSCR (“ADSCR”) that could result in different numerical outcomes. What are the methods? What are the limitations that we should be aware of? And which one shall be used? DSCR (Debt … read more
Feb 13, 2013
By Nick Crawley
There are two different ways to calculate the average DSCR (“ADSCR”) that could result in different numerical outcomes. What are the methods? What are the limitations that we should be aware of? And which one shall be used? DSCR (Debt … read more
Dec 29, 2011
By Grace Utama
The Project Life Cover Ratio is a widely used debt metric in project finance. In this tutorial we learn the steps to calculate the Project Life Cover Ratio, as well as some common modelling mistakes to avoid. Introduction The Project … read more
Dec 16, 2011
By Grace Utama
The Debt Service Reserve Account provides additional security for lenders as it acts as a cash buffer during periods of weak cashflows. In this tutorial, we learn how the DSRA/c links to the Financial Statements and how to model the … read more
Dec 07, 2011
By Grace Utama
Debt Sculpting is a commonly used term in project finance. It means that the principal repayment obligations have been calculated to ensure that the principal and interest obligations are appropriately matched to the strength and pattern of the cashflows in … read more
Dec 06, 2011
By Grace Utama
When authoring formulas in Excel, a user may often encounter a circular reference. In this article we demonstrate how to solve a common problem related to interest using high school mathematics rather than Visual Basic. A circular reference is created … read more
Oct 26, 2011
By Rickard Warnelid
Stand Alone Cash Sweep Introduction Stand alone cash sweep analysis is an alternative metric for refinance risk and repayment ability in cashflow models for project finance. This article outlines the key features of a modelling cash sweep calculation and its … read more
Oct 19, 2011
By Rickard Warnelid
CFADS introduction A project’s Cashflow Available for Debt Service (CFADS or CADS) is analysed by project lenders (senior debt banks) to determine debt sizes and repayment criteria. CFADS is calculated by netting out Revenue, Operating Expenditure (OpEx), Capital Expenditure (CapEx), … read more
May 10, 2011
By Nick Crawley
Introduction For many mining projects, the open pit/cut mining process often begins months or even years before the milling plant starts operating. The build up of stockpile requires careful treatment to ensure the right grade of the ore milled is … read more
May 04, 2011
By Nick Crawley
Introduction This tutorial shows how in when modeling a project finance project the maximum debt limit can be solved based on a target Debt Service Cover Ratio (DSCR). This exercise indicates the maximum debt size that can be supported by … read more
Nov 29, 2010
By Nick Crawley
Introduction A Finance Lease or Capital Lease is often incorrectly disclosed and treated in the financial statements. This tutorial will focus on how to practically incorporate the principles of accounting for finance leases in the financial statement of the lessee. … read more
Nov 11, 2009
By Nick Crawley
Financiers are often required to analyse multiple debt repayment methods in a project finance transaction. This process is particularly important in the structuring or credit approval processes. This tutorial demonstrates step-by-step techniques on how to dynamically build such optionality into … read more
Oct 12, 2009
By Nick Crawley
Mezzanine debt and financial modelling can often fill a critical shortfall between senior debt capacity / availability and equity funding. Mezzanine debt is a form of subordinated debt, often with an equity aspect, which ranks below senior debt in terms … read more
Sep 25, 2009
By Nick Crawley
When developing mining projects it is not uncommon to discover resources that are, on their own, too small to project finance. For many years this has meant that smaller scale projects have not been developed even in favourable prevailing market … read more
Jul 30, 2009
By Nick Crawley
Ramp-up or commissioning period which starts prior to formal project Completion can complicate financial modelling. This tutorial demonstrates how to model such pre-operating cashflows to fund construction in a transparent way. The inclusion of these cashflows is very important to … read more
May 27, 2009
By Nick Crawley
In a project finance transaction, we often need to model semi-annual debt service in a quarterly period model. This tutorial demonstrates how to code this concept in a flexible way which minimises a whole range of potential errors. For illustration, … read more
Mar 23, 2009
By Nick Crawley
Interest rate risk is where the risk that interest rates move and adversely affect the project economics. There are a range of approaches to interest rate risk management to protect your cost of funds on borrowings. This tutorial explains how … read more
Mar 09, 2009
By Nick Crawley
The Project Life Cover Ratio (“PLCR”) is commonly used debt metric in project finance. Together with the Debt Service Cover Ratio (“DSCR”) and Loan Life Cover Ratio (“LLCR”), these debt metrics in one form or another usually appear in project … read more
Feb 26, 2009
By Nick Crawley
A good scenario manager allows you to look at a different ‘world’ in the model by changing just one cell. When combined with our 1-D Data Table approach the results of the Scenarios are shown without pressing any buttons! Introduction … read more
Jan 29, 2009
By Nick Crawley
We have earlier published a Tutorial titled “Project Finance Modelling Top 10 Mistakes”, describing a wide variety of problems in Project Finance Models which can be attributed to a lack of model simplicity. This article together with the examples in … read more
Oct 20, 2008
By Nick Crawley
When building project finance models, one of the key Best Practice methods adhered to is that models are transparent. This is done by using simple formulas that are laid out in a logical manner. Simple models will ensure that the … read more
Sep 28, 2008
By Nick Crawley
What are reserve tails and what implications do they have in financial modelling and associated debt sizing? One practical definition of reserves is ‘the economically mineable part of a measured and / or indicated mineral resource’. A reserve tail on … read more
Sep 25, 2008
By Nick Crawley
Demand for renewable forms of energy is growing rapidly around the world, with wind power leading this global trend in most regions. In this article we introduce the concept of Project Financing, and highlight current trends along with the implications … read more
Sep 25, 2008
By Nick Crawley
Free tutorial (PDF + XLS) on financial modelling of DSRA in project finance without circular references. The Debt Service Reserve Account (DSRA) works as an additional security measure for lenders as it is generally a deposit equal to a given … read more
Sep 25, 2008
By Nick Crawley
The Cashflow Waterfall ensures that each cashflow item occurs at the correct seniority to other items. This article outlines key categories of cashflow items and how to present Cashflow Waterfall in comparison to Cashflow Statement in a Project Finance Model. … read more
Sep 25, 2008
By Nick Crawley
This tutorial and the accompanying sample workbook focuses on the Debt Service Coverage Ratio (DSCR) which is widely used in Project Finance models. It is a debt metric used to analyse the project’s ability to repay debt periodically. DSCR = … read more
Sep 25, 2008
By Nick Crawley
Financial models in project finance are often plagued with a wide variety of problems. The vast majority of these can be attributed to a lack of simplicity, a failure to clearly segregate different elements of the model, and the absence … read more
Sep 25, 2008
By Nick Crawley
The Loan Life Cover Ratio (LLCR) is one of the most commonly used debt metrics in Project Finance. Unlike period-on-period measures such as the Debt Service Cover Ratio (DSCR) it provides an analyst with a measure of the number of … read more
Sep 25, 2008
By Nick Crawley
Project Finance is the financing of, often long-term, industrial projects and increasingly those which provide public services or infrastructure. They are often based upon complex financial and contractual structures commonly involving many legal entities. The cashflows from the project are … read more
Sep 25, 2008
By Nick Crawley
A convertible note is a debt instrument which grants the bondholder the right to convert the debt obligation into a predetermined number of shares of common or other stock of the issuer. They are traditionally offered by lenders requiring a … read more
Sep 24, 2008
By Nick Crawley
In this article, we introduce how to use a dynamic graph of CFADS/DSCR as a useful tool for debt sculpting/sizing and credit analysis, particularly in project financings. In Project Finance, Cashflow Available for Debt Service (CFADS) is analysed by project … read more
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