Debt exists to maximize equity returns… or not?
Interepet and analyze the dense legalese of credit agreements.
Identify fulcrum and distressed investing in turnaround situations.
Professionals in (or looking to transition into) these fields:Credit and Commercial Banking Debt and Distressed Investors Turnaround and Special Situations Capital Structure Arbitrage
…and all finance professionals up and down the entire capital stack.
You may already know the 5 C’s of Credit, but there’s so much more to examine.
Identify all the key qualities of solvency from the top-down and bottom-up, and integrate market dynamics when quantifying creditworthiness.
We discuss the legal aspects of issuing debt by looking at major sections of debt agreements and legal/financial covenants.
Walk through events of default, technical defaults, loose vs. tight covenants, and more.
Familiarize yourself with the world of firms going through restructuring or bankruptcy. That means DIP financing, Section 363 sales, Chapter 11, and Chapter 7.
Build a distressed sensitivity model that reveals various outcomes based on key value drivers, and conclude with an analysis of the fulcrum security.
Establish a foundation for forecasting and modeling a business’ core cash needs.
Distinguish a TWCF model from a traditional model: there’s much more to it than just payroll periods.
Take a broad overview of recaps, debt/equity swaps, and key credit ratios.
Analyze several recap strategies directly in an Excel model. As usual, it’ll be complete with a summary and sensitized based on different scenarios of credit/leverage statistics.
Our approach is to teach you how to fish, rather than give you a fish.
We don't give a one-way lecture where you memorize every cell and formula.
We nudge you toward uncovering answers on your own by leading with the right questions.
The end result? Longer-term knowledge retention that will last an entire career.
I build models nearly on a daily basis and the training showed me techniques to improve my efficiency in modeling, such as the great shortcuts … and the most effective functions for each purpose, which I now use on a daily basis to improve the quality of my work.
Learn to analyze and understand the factors driving the risk / reward profile for a borrower and its debt securities. Many independent elements impact a borrower’s creditworthiness and the value of its loans; however, true mastery of credit analysis demands an integrated perspective, weaving these disparate parts into a comprehensive, big-picture mosaic.
This program’s goal is to assist you in developing a comprehensive foundation in credit analysis. Our framework for evaluating credit begins with the fundamentals; traditional and universally-accepted elements reviewed by lenders: the Character, Capital, Collateral, Capacity, and Conditions (the “Five C’s”) of debt and the debtor. These basics support building a stronger foundation to understand the qualitative and quantitative factors impacting a firm’s ability to repay interest and principal. Learn the qualities which most impact a firm’s solvency from a top-down analytical perspective, beginning with global economic trends and business cycles. Further assess a company’s credit quality with a bottom-up analysis, evaluating the firm’s performance relative to its peers. Finally, drill down even deeper to assess the structure of the company’s debt securities and the potential value from specific attributes protecting creditors’ investment.
Leverage your foundation to understand how major ratings agencies assess credit and ratings are determined. Learn which elements of credit are most relevant to the agencies and which are evaluated less rigorously. Compare the rating methodologies and contrast the meanings of the underlying credit ratings across credit ratings agencies. Understand how ratings changes can have drastic effects on a security’s market pricing.
In addition to employing these academic practices and standard methodologies in evaluating a debtor’s creditworthiness, you will also learn and integrate real world market dynamics into your credit analysis. Examining the impact of qualities such as market liquidity and the long-term objectives of creditors provides further visibility into the borrower’s risk / reward profile. Reviewing additional considerations that impact a loan’s risk / reward profile, including counterparty risk and concentration risk, adds deeper insight into a position’s creditworthiness.
Recognize the actions and tools sometimes applied by lenders to mitigate credit risk, including credit derivatives and insurance, credit tightening, and portfolio diversification. Understand the costs and benefits of utilizing these tools, and the scenarios in which they are most effective. Finally, put your comprehensive foundation into practice by creating an actual credit review write-up.
The comprehensive analysis of a debtor and its securities from both the top-down and the bottom-up will allow you to judge a company’s creditworthiness with a greater breadth and depth of understanding relative to many other market participants. This real world analysis, integrating established methodologies with the tools used by front-line Wall Street credit analysts, is a comprehensive foundation for credit review and analysis.
Understand the legal aspects of issuing bank debt and corporate bonds by analyzing major sections of debt agreements and legal and financial covenants. Comprehend the major types of covenants found in credit agreements and bond indentures: affirmative, negative and financial. In addition, delve into maintenance and incurrence covenants, reps and warranties, indemnities. Learn objective of relevant credit agreement provisions and common related structural issues and thoroughly analyze senior credit agreements covenants and high-yield bond covenants. Understand implications of covenants on “events of default” and differentiate between technical defaults as well as compare and contrast “loose” vs. “tight” covenants and covenant-light and covenant-tight agreements.
This course walks through the concepts behind company recapitalizations (recaps) and quantifies the impact of the various approaches available. The first section opens with a high-level discussion of recaps and debt/equity swaps. Next is a brief primer on key credit ratios and how they can be implemented with best practices in Excel. The meat of the course then begins, reviewing multiple recapitalization strategies one by one, thoroughly explained qualitatively and executed quantitatively in a working Excel model. Afterward, these results are analyzed before wrapping up with a complicated scenario and sensitivity layer that can determine viable scenarios based on different assumptions of credit/leverage statistics. What’s left is a comprehensive model capable of simulating strategies for any recap situation.
Learn how to analyze and value distressed companies and securities undergoing restructuring or bankruptcy process. First, appreciate and understand the historical perspective and context of the distressed market. Then, explore various opportunities in distressed investing from securities types to investment strategies. Properly identify and isolate the true sources and drivers of returns from supply & demand to operational changes to market rebound to recapitalizations. Quantify and comprehend the dramatic changes to a distressed firm’s capital structure and the implications on the valuation process and realignment of economics. Understand the reorganization and bankruptcy process, including DIP (debtor-in-possession) financing, Section 363 sales (stalking horse), Chapter 11 reorganization, and Chapter 7 liquidation. Fully comprehend the key critical covenants required involved in distressed securities as well as the entire turnaround & restructuring process by identifying key parameters for successful business plan implementation.
2.5 hours / 4 hours
Learn how to model and value distressed companies and securities undergoing restructuring or bankruptcy process. Build upon our Distressed Investing Overview course by quantifying the dramatic changes to a distressed firm’s capital structure and the implications on the valuation process and realignment of economics. Build robust distressed sensitivity financial model. Learning objectives include: model out sample distressed company on a standalone basis, with and without restructuring; incorporate detailed valuation sensitivity to identify key value drivers in a distressed situation; analyze the fulcrum security based on various valuation and leverage scenarios.
3 hours / 5 hours