Corporate Credit Analysis & Financial Modelling

5 days 24-28 Apr 2017, London UK £4,895.00 + VAT* Download brochure Add to basket
5 days 14-18 Aug 2017, London UK £4,895.00 + VAT* Download brochure Add to basket
5 days 22-26 Oct 2017, Dubai UAE £4,595.00 Download brochure Add to basket
5 days 11-15 Dec 2017, London UK £4,895.00 + VAT* Download brochure Add to basket

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Overview

Through every business cycle, banks and other financial institutions lose billions of dollars as a result of their failure to analyse credit risk correctly and to foresee downside risks. Even if these institutions do not suffer direct financial losses due to default / market movements, they may be receiving an inadequate return for the risks involved. Given the increasing use of leverage by both the private and public equity markets, combined with heightened sovereign/geo-political risks, in-depth credit analysis is essential to avoiding credit and currency losses. The aim of this course is to teach delegates how to analyse corporate credit risk and how to assess an appropriate return. This course does not extend to the analysis of banks, insurance companies or structured vehicles.

How will this course assist you?

  • Through case study analysis you will learn to analyse thoroughly different types of corporates to allow you to make sound business decisions.

During the five day course, we will cover:

  • The bank loan and bond markets
  • Qualitative risk analysis: sovereign, industry & company specific
  • Quantitative risk analysis including key credit ratios
  • Credit ratings & the rating agencies
  • Impact of corporate finance activity on credit quality
  • Financial modelling in Excel, including LBOs
  • How to apply sensitivity analysis
  • Documentation: high grade & high yield prospectuses, loan document
  • Default predictors & recovery rates
  • Structural & contractual subordination

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

Instructors

We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

London
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 issue markets, the Asian convertible bond markets and of corporate restructurings of distressed credits. She specialised in the telecoms sector and was closely involved in the structuring, raising and/or trading of bank and public debt for telecoms companies in many countries, including Europe, South Africa, Asia and Latin America. She also has extensive experience of corporate finance transactions, including mergers, disposals, privatisations, IPOs and capital raisings. Until 2003, she was an Executive Director at Lehman Brothers in Fixed Income Research in London, having also worked for CS First Boston and Kleinwort Benson. She now works on an independent basis advising the legal and private equity professions on credit analysis and company valuation. She has a degree in economics from the London School of Economics and stock exchange qualifications from London and New York.

Dubai
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 issue markets, the Asian convertible bond markets and of corporate restructurings of distressed credits. She specialised in the telecoms sector and was closely involved in the structuring, raising and/or trading of bank and public debt for telecoms companies in many countries, including Europe, South Africa, Asia and Latin America. She also has extensive experience of corporate finance transactions, including mergers, disposals, privatisations, IPOs and capital raisings. Until 2003, she was an Executive Director at Lehman Brothers in Fixed Income Research in London, having also worked for CS First Boston and Kleinwort Benson. She now works on an independent basis advising the legal and private equity professions on credit analysis and company valuation. She has a degree in economics from the London School of Economics and stock exchange qualifications from London and New York.

Venue

London

Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Dubai

Dubai Hotel

This programme takes place on a non-residential basis at a central Dubai hotel. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.

Dubai has an incredible number of hotels. Courses held here are mainly held at the J.W. Marriot hotel, Sheraton Dubai Creek and Le Meridien all in central Dubai.
 
J.W. Marriott Hotel – Abu Baker Al Siddique Road, PO Box 16590, Dubai, U.A.E
Phone +971 4 607 7811; Fax +971 4 607 7011
www.marriott.com
 
At the JW Marriott Dubai you will enjoy luxury on your terms; impeccable service and elegant surroundings allow you to relax and focus on your own agenda. With 344 luxuriously appointed rooms and suites the J.W. Marriott provides an oasis of calm in a busy city while the award-winning restaurants have the recipe for satisfying a taste for international flavour.        
 
Sheraton Dubai Creek – Baniyas Street, PO Box 4250, Dubai, U.A.E
Phone +971 4 228 1111; Fax +971 4 221 3468
www.starwoodhotels.com
 
After undergoing a complete renovation, the Sheraton Dubai Creek Hotel& Towers reopened October 10th, 2002 with a fully refurbished interior and exterior. The 255 room hotel now offers more creek-view rooms, redesigned atrium lobby, outstanding food and beverage facilities, upgraded rooms with state-of-the-art data connectivity, and Dubai's newest conference facilities. 

Le Meridien – PO Box 10001, Airport Road, Dubai, U.A.E
Phone +971 4 282 4040; Fax +971 4 282 5540
www.lemeridien-dubai.com
 
Le Meridien Dubai is a five star deluxe hotel built on two floors and surrounded by 38 acres of landscaped gardens. The hotel is elegantly furnished with a french accent that incorporates the individual character and flair of the local culture. The hotel is minutes away from the commercial districts and shopping centres and a short distance from Dubai International Airport. Facilities include a choice of 15 restaurants and bars, 24-hour room and laundry service, two fully equipped business centres and a state-of-the-art Spa and fitness club.

 
 

Related Courses

Inhouse


 

Do you have five or more people interested in attending this course? Do you want to tailor it to meet your company's exact requirements? If you'd like to do either of these, we can bring this course to your company's office. It might even prove to be more cost effective.





Our Tailored Learning Offering

If you want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business and we’ll be here to support you every step of the way. From the initial consultancy through to evaluating the success of the full learning experience. We'll ensure you get the maximum return on your training investment.



We can offer any of our public courses delivered at your office or we can devise completely tailored solutions specialising in:


Complete a call back request to speak to a learning specialist or learn more about our offering

 

Agenda

Agendas are localised, please select your preferred location.

Day 1


Registration commences at 8.15am

Programme runs from 8.30 – 4.30 daily

Section 1: Types of lending

  • Different types of bank facilities
  • The bond markets - high grade and high yield
  • Credit default swaps

Section 2: Quantitative analysis

Review of historic results - assessment of financial position and risks

  • Analysing the P&L account
  • Understanding the sources and sustainability of revenues & earnings
  • Understanding the nature of the cost base
  • Adjusting for exceptionals, 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

Day 2


Section 2: Quantitative analysis

Review of historic results (continued)

  • 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: analysis of a retailer & property company
  • Assessing debt capacity: balancing growth with asset turnover & financial policy
  • Accounting factors; how results can be manipulated


Day 3


Session 3: Modelling and forecasting in Excel

  • Creation of full financial forecasting models
  • Creation of assumptions – what are the critical value drivers?
  • Return analysis
  • Creation of covenant package
  • LBO model
  • Sensitivity analysis – base case, management case, downside cases
  • Case studies: modelling with Excel of historic accounts, creation of forecasts, calculation and analysis of ratios, creation of covenants. Creating a refinancing package for a cyclical company. Modelling different scenarios in one worksheet.

Day 4


Session 4: Business risk analysis (qualitative factors)

  • Sovereign
    - Economy, currency, credit rating, political risks
    - Key  themes for 2016
  • Industry
    - Porter’s five forces
    - Industry life cycle (growth)
    - Industry cyclicality (earnings quality)
    - Leading indicators
    - Competition
    - Pricing dynamics; demand vs. supply
    - Changing business environments
    - Regulation
    - Capital intensity and cost base
  • Case study: review credit of company in changing industry environment
  • Company specific
    - Management
    - Operating, capital and corporate finance strategies
    - Competitive advantages and cost position
    - Product/service offering, differentiation and pricing power
    - Diversification
    - Customer/supplier concentration
  • Structural factors
    - Shareholder structure
    - Ownership and support
    - Structural and contractual subordination
    - Impact of structural issues on ratings

Session 5: Credit ratings

  • Rating scales and definitions
  • Recovery ratings
  • Relevance of sovereign ratings
  • Advantages & limitations of the rating agencies

Session 6: Leverage analysis

  • The advantages and disadvantages of leverage: debt vs. equity
  • Suitability for leverage
  • Determinants of leverage
  • Impact of shareholder value considerations on credit quality
  • Double leverage
  • Case study: evolution of BAA’s risk and financial profile and structure of borrowing

Day 5


Session 7: Impact of corporate finance transactions on credit quality

Corporate finance transactions

  • Mergers, acquisitions, disposals, breakups, demergers, LBOs, etc
  • Case studies: impact of M&A on credit quality

Leveraged buyouts

  • Rationale to LBOs
  • Structuring an LBO
  • Quick method of modelling an LBO
  • Assessing returns to equity and subordinated lenders

Session 8: Pricing for bonds and loans

Session 9 : Documentation and covenants

  • What is the purpose of the loan and is it related to the repayment sources?
  • What is the structure of debt facilities?
  • Documentation
  • Overview of a loan agreement
  • Overview of high grade and high yield bond prospectuses
  • Reps and warranties, conditions precedent, negative pledge
  • MAC clauses, events of default, cross default, equity cures etc
  • Focus on covenants financial and non-financial covenants
    - Covenant definitions (financial), including off-balance sheet liabilities
    - Covenant definitions (nonfinancial) what makes for stronger or weaker covenants
    - The 8 key covenants for event and recapitalisation risks

 Course summary and close

Day 1
Types of lending; credit ratings; financial analysis
  • The lending markets
  • Overview of the bank and bond markets
  • High grade & high yield markets
  • Long term & short term markets
  • Liability management
  • Pricing
Credit ratings
  • Background to the rating agencies
  • Overview of rating scales and definitions
  • Relevance of sovereign ratings
  • Default probabilities and recovery rates
  • Limitations of the rating agencies
Accounting factors
  • Accounting standards (IFRS, US GAAP)
  • Accounting tricks to enhance results
Results analysis
  • The profit & loss account; adjusting for exceptionals
  • The cashflow statement; re-organising the cashflow statement
  • Earnings versus cashflow
  • The balance sheet; debt maturity profile
  • Off balance sheet liabilities
  • Adjustments for operating leases
  • The importance of forecasting and of cashflow versus assets
  • Ratio analysis (Leverage, liquidity, earnings & cash coverage, asset coverage, working capital, asset turnover)

Case study: Analysis of a listed retailer & listed property company.

Day 2

Qualitative factors, financial policy
Qualitative factors
Sovereign
  • Economy, currency, credit rating, political risks
Industry
  • Porter’s five forces
  • Industry life cycle (growth)
  • Industry cyclicality (earnings quality)
  • Leading indicators
  • Competition (ROIC)
  • Pricing dynamics; demand vs supply (ROIC)
  • Changing business environments
  • Regulation (ROIC)
  • Capital intensity & cost base (ROIC)

Case study: Review credit of company in changing industry environment

Company specific
  • Management
  • Operating, capital and corporate finance strategies
  • Competitive advantages & cost position
  • Product/service offering/differentiation/pricing power
  • Diversification
  • Customer/supplier concentration
Structural factors
  • Shareholder structure
  • Ownership & support
  • Structural & contractual subordination
  • Impact of structural issues on ratings
Financial policy
  • Debt vs equity
  • Low leverage vs high leverage
  • Suitability for leverage
  • Assessing debt capacity
  • Impact of Shareholder value policies on credit profile

Case study: Evolution of BAA’s risk and financial profile and structure of borrowing.

Day 3

Modelling and forecasting in excel; impact of corporate finance transactions on credit quality; leveraged buyouts
Modelling in Excel
  • Creation of full financial forecasting model
  • Analysis of historic track record
  • Analysis of trends/ratios
  • Preparation of financial forecasts
  • Creation of assumptions
  • Return analysis
  • Sensitivity analysis vs a base case
  • Impact of change in capital structure
  • Creation of covenant package

Case studies: modelling with Excel of historic accounts, creation of forecasts, sensitivity analysis, calculation and analysis of ratios, creation of covenants. Creating a refinancing package for a cyclical company.

Impact of corporate finance transactions on credit quality
  • Mergers, acquisitions, disposals, break-ups, demergers, LBOs etc

Case studies: Impact of M&A on credit quality

Day 4

DAY FOUR: LBOs, RISK LIMITATION TECHNIQUES, COVENANTS, DOCUMENTATION; DISTRESSED CREDIT SITUATIONS
Leveraged buy outs
  • Rationale to LBOs
  • Structuring an LBO
  • Quick method of assessing LBO returns
  • Assessing returns to equity & subordinated lenders
  • Modelling an LBO
Contractual risk limitation techniques
  • Financial covenants
  • The 8 key covenants for event & recapitalisation risks
  • Review of bank loan agreement
  • Review of high grade & high yield bond prospectuses
  • Market methods to limit risk
Distressed credits
  • Signs of business deterioration
  • Identifying the problems
  • Developing a revised business plan
  • Assessing recovery rates
  • Default, insolvency, bankruptcy, administration, liquidation

Case study: company deterioration resulting in debt for equity swap
Case study: how different creditor aims can block restructuring
Case study: restructuring debt claims for a firm in default
Case study: assessing recovery rates for different debt tranches for a firm in default

Why us


We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product