This page addresses is the parent page for one of the most difficult sculpting issues in project finance. This issue involves creating a curved DSCR that produces the correct amount of debt; the minimum DSCR allowed by the lender; and the average debt life. Please go to the sub-menus to work through the issues. I have discussed this issue with project finance experts and it is not uncommon to see that people are not familiar with the issue. the debt sculpting in the case where the amount of debt is established from the debt to capital ratio and you have a term sheet with a defined minimum DSCR and the maximum debt life.
Excel File that Sculpting Issues with Fixed Debt to Capital and Changing DSCRs Over the Tenor of the Loan and Multiple Issues
Playlist on Sculpting
If you really want some torture, you can try to review some of the sculpting videos in the playlist below. When working through the playlist please understand the formula that the PV of debt service is the debt at the start of the repayment period. If you cannot convince yourself of this you will end up with horrible macros that you may be proud of, but that really stink.
If you are in the mood for torture or maybe if you are having trouble sleeping, you can look through the sculpting playlist. I have put together various sculpting videos that I have made over the years. I have tried to put the more basic videos first (with the exception of the very first). The videos all apply the fundamental formula that the PV of debt service over the repayment period is equal to the debt size at the beginning of the repayment period (i.e. the period just prior to the commercial operation date). Over time I have learnt more about sculpting issues that can involve curved DSCR’s, multiple debt issues, incorporation of on-going fees, alternative debt sizing options, complex income taxes and computation of DSRA moves as part of the CFADS. I hope I have covered a lot of these issues in the videos. As with other items, you can always send me an email at firstname.lastname@example.org.