Certificate in Leveraged Finance Analysis

Fitch Learning

How long?

  • 3 days
  • online

Fitch Learning


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Who should attend

Experienced finance professionals responsible for credit risk management, marketing, structuring or evaluating leveraged transactions, as well as anyone who needs to be able to analyse the transaction finance structure of a deal in order to maximise returns.

About the course

This certification is comprised of two courses: LBO Modeling and Structuring Leveraged Buy-Outs. This three day certificated programme, will provide participants with the framework to identify appropriate candidates for leverage, build a model to demonstrate the impact of debt on the financials, and the skills to structure a leveraged finance transaction. This is a highly interactive and practical programme where participants will be able to apply the principles learnt to case studies during exercises. The first two days will focus on understanding the terms, the market environment, the frameworks and structuring. The final day will be focused on practical model building.

Key Learning Outcomes:

  • Understand the key terms and conditions of various debt instruments which have been used historically in Leveraged Finance as well as instruments available in the current market
  • Apply analytic tools to identify suitable candidates for leverage
  • Appreciate how market conditions have affected structures in the market place
  • Use forecasts of the key cash flow drivers to determine an appropriate debt quantum and the relationship between amortizing and non-amortizing debt
  • Structure leveraged transactions combining different debt instruments (both pre- and post-credit crunch)
  • Understand the key elements of an intercreditor agreement and how the inter-relationships of the debt providers are governed
  • Appreciate the importance of safeguards to enable early intervention in deteriorating credits and the correlation between early intervention and ultimate recovery rates in distressed credits
  • Construct an LBO model
  • Identify interesting LBO candidates from an IRR or money multiple perspective

Analytic Overview

An overview of the leveraged finance market including trends in the leveraged loan and high yield markets, and comparison of pre and post-credit crunch transaction structures.


  • Market trends: leveraged debt market, leverage multiples, capital structures and parties
  • Sources of demand and supply for leveraged transactions
  • Current market condition and the impact of the credit crunch and economic downturn on default and recovery rates
  • Definition of primary buyouts, secondary buyouts, dividend recapitalizations, debt buy backs etc
  • Key parties to a leveraged transaction and their motivations and how this impacts transaction structures
  • Application of analytical tools to determine what kind of company makes a suitable candidate for high leverage
  • Illustration case study: assess a company’s suitability for leverage

Purpose payback

  • Payback concepts to understand structures of different classes of debt
    • Cash flow
    • Asset sales
    • Refinancing

Funding Instruments

An overview of corporate funding strategy and on the key characteristics and features of the main funding instruments used in leveraged transactions

  • Corporate funding strategy and its impact on choices for company capital structure and funding instruments
  • Shareholder considerations and measuring return on equity in leveraged finance
  • Overview of the structural features, required market conditions and pricing of LBO instruments and how these are changing
    • Senior debt products used in leveraged transactions: bank (e.g. alphabet loans, revolvers, working capital, bridge finance, acquisition, restructuring and CAPEX lines) and bonds
    • Intermediate capital and hybrid products: high yield, warranted and warrantless mezzanine, second lien, vendor notes, PIK notes
    • Equity: types of equity and their impact on debt providers.
    • Exercise: funding instruments

Forecasting Performance

Introduction of a structured framework for forecasting company cash flow with a view to assessing sustainable leverage.

  • Key sector and company drivers within the company cash flow
  • Modeling performance: build assumptions, sensitize forecasts and benchmarking
  • Illustration case study: check case study assumptions and run sensitivity analysis

Structuring Leveraged Transactions

Participants will learn how to structure leveraged transactions including identifying the appropriate amount of debt, using different debt instruments and understanding characteristics and relationships of the various debt instruments.

Using forecasts to determine the capital structure

  • The use of cash-flow forecasts to determine debt capacity
  • Balance amortizing and non-amortizing debt structures
  • Quantifying and pricing acceptable levels of refinancing risk
  • How exit strategies (trade sales, IPOs, secondary and tertiary buyouts and recapitalizations) influence capital structures
  • The impact of funding structures on issuer default and recovery ratings
  • Recycled credits (refinancing and secondary/tertiary buyouts)

Debt profile

  • Structuring debt: amount, currency, tenor, drawdown and amortization profile
  • Impact of the institutional investor
  • CAPEX, acquisitions, working capital
  • Use of securitizations, sale and leaseback, borrowing base facilities to maximize debt quantum
  • Asset quality and assigning ‘haircuts’ to determine loan amounts
  • Borrowing base structures
  • Bridge facilities: risks associated with repayment sources
  • Combining bank debt with intermediate capital
  • Illustration case study: structuring a buyout


  • Define ranking: contractual (legal), structural and constructive subordination
  • Establish and maintain ranking within the capital structure
  • The impact of alternative funding products on senior lenders: evolving market conventions.
  • Key terms of an Intercreditor Agreement and their impact on senior and junior creditors
  • Exercise: structural subordination/bond structures


  • Senior bank debt covenant packages: ‘Standard’ terms and conditions, establishing headroom
  • The rise and fall of ‘covenant light’: the need for warning signals and the impact on lenders of different control mechanisms
  • Senior bank debt and senior bonds: how pari is pari?
  • The terms and conditions of subordinated debt
  • The interrelationship between senior debt, stretched senior and other subordinated instruments
  • Exercise: covenants


  • Pricing conventions in the leveraged market: fees, cash and deferred margins, warrants etc
  • Risk-return profiles
  • Exploit value in the capital structure

Day 2 Case Study

The day two case study will be undertaken in small groups. Participants will be expected to apply key points from the workshop so far to appraise and structure a leveraged refinancing.

Revisiting the basics of LBOs

  • How do LBOs work?
  • What makes a good LBO candidate?

LBO analysis as a transaction valuation technique

  • Key constituents of a leveraged transaction
  • Comparison of LBO valuation with other valuation techniques

Financing an LBO

  • Senior debt (Term A, B and C) and second lien
  • Junior debt sources including high yield and mezzanine
  • Amortizing and bullet repayment loans
  • Alternatives to ordinary equity: shareholder loan, preference shares
  • PIK instruments, warrants, yield enhancing structures

LBO model in Excel of a case company

  • Integrated model as a base
  • Importance of financial forecasting
  • Control premium for public-to-private transaction
  • Entry and exit multiples
  • Sources and uses of funds, including banking and advisory fees
  • Building cost assumptions for all the elements of the capital structure
  • Detailed cash flow statement
  • Debt repayment schedules including a cash sweep accelerator
  • Revolving Credit Facility
  • PIK instruments
  • Building and interpreting the multiple of money and IRR calculations
  • Sensitivity tables

Certificate in Leveraged Finance Analysis at Fitch Learning

From  GBP 2 995$3,995
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Coursalytics is an independent platform to find, compare, and book executive courses. Coursalytics is not endorsed by, sponsored by, or otherwise affiliated with any business school or university.

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