Euromoney Learning Solutions

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About the course

Agenda Singapore

Day 1 Advanced financial analysis, including calculating key credit ratios

Analysing the income statement

  • Adjusting for non-recurring, non-core earnings, discontinued items, operating leases, derivatives
  • Adjusting for joint-ventures/associates and NCI
  • Analysing EBITDAR, EBITDA, EBIT; pitfalls of using EBITDA or adjusted EBITDA
  • What constitutes finance expense, including expenses for derivatives and quasi debt
  • Ratio analysis: margins (gross, EBITDAR, EBITDA, EBIT, pre-tax, net), interest cover, basic and enhanced dividend cover

Analysing the cashflow statement

  • IFRC layout – operating cashflow, NWC, investment & financing
  • Reorganising the cashflow statement to show CADR
  • Differences between operating earnings and operating cashflow
  • Primary and secondary sources of debt repayment
  • Cashflow based lending vs asset based lending
  • Ratio analysis: Interest and investment coverage; debt service and debt repayment coverage, cash conversion ratios, dependence on external financing, cashflow based ROIC, dividend coverage

Analysing the balance sheet

  • The asset base and consolidation policies
  • What constitutes debt – derivatives & quasi-debt
  • Off balance sheet liabilities
  • Adjusting for securitised receivables, operating leases, vendor funding, recourse financing, contingent liabilities, letters of credit, performance guarantees, retiree benefit deficits
  • Liquidity analysis
  • NCI, joint ventures & equity accounting
  • Ratio analysis: leverage, liquidity, asset coverage, working capital, ROIC, ROE, asset turnover, Dupont analysis
  • Case studies of high yield and complex high grade accounts – to be agreed with Standard Bank

Day 2 Advanced financial modelling in Excel

  • Modelling amend and extend facilities
  • Modelling for a new capital structure eg following new shareholder value policies, leveraged buyouts, deleveraging
  • Modelling new loan features eg PIK toggles, amortizations, equity kickers

Loan structuring

Credit enhancement methods


  • Typical structure and participants
  • Creating cashflow ring-fencing measures
  • Rating considerations
  • Credit linked notes

Case study of a major ring-fencing mechanism to give lenders additional protection

Parent and subsidiary rating linkage

  • Credit assessment of groups, the importance of ownership, analysing a group
  • Non-recourse projects eg associates and joint-ventures
  • Non-guaranteed subsidiaries
  • Captive finance subsidiaries
  • Fitch criteria for associates, j/vs, subsidiaries
  • S&P criteria for associates, j/vs, subsidiaries, captive finance subs
  • Sovereign risk

Importance of sovereign risk to corporate analysis

Sovereign debt

  • Sovereign composite issuance
  • Sovereign guaranteed debt
  • Sovereign partially-guaranteed debt

Day 3 Company valuation for acquisition finance and distressed situations

  • Why do bankers need to value companies
  • Background to company valuation – growth, ROIC, WACC etc
  • Enterprise value vs equity value
  • Multiple valuations – revenues, EBITDAR, EBITDA, EBIT, net income
  • DCF valuations
  • NAV/NBV valuations

Day 4

Non-performing loans and distressed debt

  • Background and definitions
  • Factors leading to NPLS and early warning signs
  • Options for restructuring and recovery – operational and capital restructurings
  • Modelling debt restructuring options for distressed firms

Case studies of distressed credits that survived and that went bankrupt

## Agenda Jakarta

Day 1

  1. Review of Credit Analysis via 5P approach
  • Credit Analysis – ProfileTop down approach to non-financial analysis: Macro, Industry, Company, Business, People
  • Credit Analysis – PurposeCredit Policy, Regulations, Compliance, Sources of repayment, Justification
  • Credit Analysis – PaymentFinancial performance and condition of counter-partyRepayment ability of counter-party
  • Credit Analysis – ProtectionAlternative sources of repaymentDifferent steps to mitigate credit risks
  • Credit Analysis – PerspectiveUnderwrites credit risks after thorough assessment of risks assessed under the 4Ps
  1. Assets Conversion Lending
  • Completion of Asset Conversion Cycle: Four components of Business Risks
  • Timing of Asset Conversion Cycle
  • Types of Working Capital Financing: Permanent, Increasing, Seasonal, Non-current
  • Spontaneous financing: what is the underlying cost?
  • The source of repayment
  • The usage pattern• The facility amount compared with other banks
  • The inventory risks and receivables risks
  • What is the credit protection available?
  • What is the foreign exchange exposure?
  • Trade Finance as a form of working capital financing
  1. Capital Expenditure Lending

• The rationale of the capital expenditure• What is the justification?• Status of the expenditure• Evaluate all the risks: completion, operational, offtake, raw material, environmental, regulatory• Evaluate the milestones• What is the cushion for cost overruns?• Breakeven Analysis• What is the monitoring mechanism?• Assets Backed Lending

Day two

  1. Cashflow & Financial Projection
  • Determine the debt levels and debt capacity
  • Project the profitability
  • Project the balance sheet structure
  • Project future credit ratings
  • Established the basis for financial covenants• Parameters for Income Statement
  • Parameter for Balance Statement
  • What is the base case?• What is the stressed case? What is the worst case?
  • The risks to determine from the projections
  1. Credit Monitoring
  • Consolidated all risks identified by 5P credit analysis
  • Create a system to monitor these risks periodically
  • Review all financial information received or released in the public space promptly
  • Share prices movement• Moody’s KMV-EDF• Covenants checking• Stress the risk factors periodically• Customer visit / Site visit

Case Study: The case to study will be a listed company on the Jakarta Stock Exchange. The company engages in infrastructure projects, and has heavy working capital requirements. Participants will be able to apply the above concepts during the case study session on break-out group basis.

Learn advanced analytical & structuring techniques for credit risks

A 4-day training course with extensive case studies covering:

  • Advanced financial analysis, including calculating key credit ratios
  • Advanced financial modelling in Excel
  • Credit enhancement methods; creating cashflow ring-fencing structures; CLNs
  • Parent and subsidiary rating linkage; related party risks
  • Company valuation for acquisition finance and distressed situations
  • Deteriorating credits, potential and actual NPLs: warning signs and strategies for minimizing loss

Course Background

During the financial crisis, many banks and other financial institutions lost billions of dollars due to their failure to analyse credit risks correctly. Even when financial institutions do not suffer direct financial losses due to default or market movements, they may be receiving an inadequate return for the risks involved. With leveraged instruments set to remain a standard part of corporate capital structures, in both the private and public markets, knowing how to analyse and minimize credit risk remains key to avoiding losses, maximising returns and limiting capital usage. This course introduces more advanced analytical and structuring techniques for assessing, limiting and offsetting credit risks. This course does not extend to the analysis of banks, insurance companies or structured vehicles.


The course combines formal theoretical instruction with frequent use of exercises and case studies. These are based on real situations and are designed to help delegates implement new practices and to learn from empirical experience. Delegates are expected to know how to use Excel. The course is practical and inter-active, with delegates encouraged to ask questions. The techniques taught are intended to be of immediate practical use in the workplace. The lecturer will be available throughout the duration of the course to offer additional help if required.

Who should attend

  • Bank credit officers
  • Investment bankers
  • Management consultants
  • Bond credit analysts
  • Fixed income/credit traders
  • Fixed income/credit sales people
  • Fund managers
  • Treasurers
  • Compliance officers
  • Financial decision makers in corporations

Trust the experts

Sarah Martin

Former Executive Director of CSFB and Lehman Brothers, the Course Director has spent seventeen years working as an investment banker in Europe and the US. She has principally worked in the credit markets and has experience of the US and European high grade and high yield markets, the European new...


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