Finance and bankability
Concepts used to assess cash flows, debt service, financing structure and the bankability of energy projects.
Bankability
Bankability is the ability of a project to obtain debt financing on acceptable terms.
Cash sweep
Cash sweep is a financing mechanism in which surplus project cash flows are used for early debt repayment instead of being distributed to the investor.
CFADS
CFADS, or Cash Flow Available for Debt Service, means the cash flows available to service debt.
Debt structure
Debt structure is the design of project debt financing, including leverage, repayment schedule, security mechanisms, credit terms and cash flow distribution rules.
DSCR
DSCR, or Debt Service Coverage Ratio, is a key project-finance metric used to assess current debt-service coverage.
DSRA
DSRA, or Debt Service Reserve Account, is a reserve account created to protect timely debt service.
LLCR
LLCR, or Loan Life Coverage Ratio, shows how many times the present value of future CFADS during the loan life covers current debt.
PLCR
PLCR, or Project Life Coverage Ratio, shows how many times the present value of future CFADS over the whole project life covers current debt.
Reserve account
A reserve account is a dedicated account maintained in the financing structure to secure specific risks, obligations or future expenses.
Sponsor model
A sponsor model is the financial model prepared by the investor or developer to assess project economics and prepare financing.
Waterfall
Waterfall is the structure defining the order in which project cash flows are allocated to costs, taxes, debt service, reserves, protection mechanisms and distributions.