Capital Structures and Debt Products

Analytic Overview: A framework for credit assessment and deal structuring. Market trends: leverage multiples, capital structures and instruments. Business and Financial Drivers: Macro, sector and firm specific factors which influence strategy, Corporate growth strategy: organic or through corporate acquisitions, Acquisition price, potential synergies and integration costs, Debt capacity analysis: amount of debt that can be serviced from future cash flow. Capital structure: Shareholder and management motivations; performance measures and the impact on funding, Balance between business risk and financial risk. Debt profile, Cash flow forecasts to structure debt: amount, currency, tenor, drawdown and repayment profile, Control of lending amounts through borrowing base structures. Debt and hybrid products: Bilateral and syndicated bank debt products, Debt capital markets products, Hybrid capital market products Ranking: Legal, structural and economic subordination, the role of security, guarantees and third-party support. Safeguards: Safeguards to minimize the risks and provide early warning signals, Effective financial covenants, covenant ‘lite’, Stress testing to ensure appropriate levels of attainment and trigger covenants