Commercial Banking - Debt Modeling

Commercial Banking – Debt Modeling Course Overview

This course covers the key components of building a debt model that is commonly used by commercial banks in assessing a borrower’s cash flows and performing covenant analysis. In this course, we will discuss the differences between operating finance (operating line of credit) and term lending (term loans). We will walk through the major components of a debt model including the yearly debt schedules, covenant analysis, monthly operating line analysis, as well as a quick overview of a risk rating model. By the end of this course, you should be able to construct a fully-linked debt model which entails the cash flow forecast of a borrower, its debt capacity, the impact of cash sweep, as well as any early warning signs of covenant breach.

Commercial Banking – Debt Modeling Learning Objectives

• Upon completing this course, you will be able to:
• Differentiate between operating finance (operating line of credit) and term lending (term loans)
• Understand the benefits of using different types of credit facilities
• Build a yearly debt schedules laying out the different types of debt drawn, the interest expense, and the principal repayments
• Perform covenant analysis to identify early warning signs and possibilities of breach
• Construct a monthly operating line analysis to determine the operating line drawn and amount available based on margining
• Understand how the amount of leverage could impact a company’s risk rating

Commercial Banking – Debt Modeling is an Elective Course of CFI’s CBCA® Program

CFI's Certified Banking & Credit Analyst (CBCA)® Program offers skills including credit evaluation, documentation, and review procedures. For beginners to advanced users, the CBCA® program is designed to help you become a world-class credit analyst.

Who Should Take This CBCA® Course?

This Commercial Banking – Debt Modeling course is perfect for any aspiring credit analysts working in insurance, underwriting, rating agencies, commercial lending, corporate credit analysis, and other areas of credit evaluation. It is also a great elective course for anyone who would like to learn more about how commercial banks forecast debt capacity and cash flows of the borrowers.