Have you seen a few Project Finance models before, perhaps even built one – but when you try and think of the “moving parts”, it’s all a bit hazy?

Or are you new to looking at Project Finance transactions and want to compress years of understanding into a few minutes?

Then you’re in the right place. This tutorial aims to help you to understand what are the key drivers of complexity in a Project Finance model. How do they shape the model?

Questions addressed here include

This tutorial starts off by exploring different repayment types (bullet, annuity, fixed), before diving into sculpting.

We clear up a bit of confusion about how Project Finance models are used, and the difference between the Debt Service Coverage Ratio (DSCR) as a tool to sculpt debt, versus a lender covenant that the project should not breach. This brings in the lifecycle of a Project Finance model; how is it used up to Financial Close versus in Operations?

It walks through how you sculpt debt to the Project cashflows, and sets the scene for Debt Sizing in a Project Finance model.