This seminar is for experienced professionals who need to improve practical credit skills. It is about how to analyze different kinds of risks accurately, structure loans efficiently, and use financial forecasts in risk analysis and loan structuring.
Intermediate Risk Analysis and Loan Structuring uses a number of cases based on real companies, each with a distinctive set of risks. It reinforces the basics for credit specialists with at least 2-3 years experience and gives non-specialists an applied review of the key concepts.
To attend this seminar delegates must be able to read and interpret commercial and industrial company financial statements, be familiar with GAAP (including preferably US and international GAAP), have the ability to calculate basic profitability, coverage and leverage ratios, and define cash flow measures from operating, investment and financing activities.
The seminar seeks to make the key concepts concrete, immediate and practical by using examples drawn from real industries, companies and transactions, including frequent in-class exercises in which delegates work in small groups to prepare and complete the assignments. There will be an additional 1-2 hours of preparation work each evening, for which the instructor will be available to assist delegates.
SEMINAR OUTLINE
- Demand risk
- Business Cycles
- Industry Cycles
- Seasonality
- Competitive risk
- Industry dynamics
- Company position
- Business strategy
- Management Risk
- Performance: compared to plan and peers
- Execution risk: acquisitions, reorganizations
- Integrity: disclosure, incentives, controls
- Cash flow analysis
- Cash flow and financial strategy
- Cash flow measures
- Cash flow available to repay debt
- Liquidity Risk
- Sources and uses of liquidity
- Event risk
- Turnarounds
- Capital Structure Risk
- Cash flow and debt capacity
- Financial flexibility
- Off-balance-sheet liabilities
- Debt maturity schedules
- Analyzing ways out
- Sizing the revolver
- Setting repayment schedules
- Debt products and borrower needs
- Borrower needs
- Financing alternatives
- Filling the financing gap
- Inter-creditor risk
- Cash flow vs. asset based finance
- Subordination: contractual, structural, effective
- Mezzanine products
- Debt terms and conditions
- Designing covenant levels
- Funding protection, defaults, and remedies
- Loan pricing structure
- Credit ratings
- Borrower risk ratings
- Facility risk ratings
- Ratings, capital, and loan pricing
- Credit scenarios
- Management case
- Base case
- Downside case
- Checking a forecast
- Realism and consistency
- Completeness and accuracy
- Key ratios, cumulative surplus and deficit
- Repayment schedules and debt terms
- Setting debt repayment and prepayment schedules
- Setting financial covenant levels
- Collateral dynamics
- Seminar Conclusion
- Summary of key concepts
- Resources for further study