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Modelling
2931May2017
Brazil,RiodeJaneiro
US$3,500
ExaminethelatestcashflowmodellingtechniquesinProjectFinance
CourseInstructor
Edhascreatedinnovativeforwardpricing,productivitymeasurementandinvestmentvaluationsoftwarefor
consultingclientsthroughouttheUnitedStates.Hehastaughtenergyeconomicsandfinancethroughoutthe
world,andformulatedsignificantgovernmentpolicyandcorporatestrategyintheU.S.
CourseDescription
Thecourseaddressesawidevarietyofprogramming,financial,statisticalandeconomicissues.The
programmingissuesincludedesigningmacrosrelevantforprojectfinancemodels,auditingfinancialmodels,
resolvingcircularity,modelingofdebtservicereserves,cashsweepsandotherenhancementsandorganizing
projectfinancemodelsforeffectivepresentationtoinvestors.Financialissuesincludethetheoryofdebt
capacityfromaprojectfinanceperspective,useofoptionpricingconceptsinprojectfinance,equityIRR
requirementsandcostofcapital,probabilityofdefaultandlossgivendefault.
A3daycoursefocusedonprovidingdelegateswiththeskillsandtechniquestodevelopaprojectfinance
model:
l Understandthefundamentalstructureofaprojectfinancemodelandlearnexceltechniquesthatcreate
efficient,robustandstableprojectfinancemodels
l Incorporatesimpleapplicationsinvolvingdebtcapacity,contractpricing,debtstructuring,breakeven
analysisandprobabilityofdefault
l Applyaprojectfinancemodelinanenergyorinfrastructurecasestudytoconsidertheappropriatedebt
servicereservelevels,covenants,liquidateddamageprovisions,debtamortizationschedulesandcontract
prices
l Understandhowbreakevenanalysis,scenarioanalysis,tornadodiagrams,timeseriesequationsand
MonteCarlosimulationscanbeusedtoanalyzeriskwithprojectfinancemodels
l Addressdetailedandcomplexissuesassociatedwithdebt,riskanalysis,constructiondelays,reserve
accounts,incometaxesandotherissues
l Incorporatethedebtaspectsofprojectfinancemodelsincludingconstructionofacashflowwaterfall
sculptingrepayments,accountingforfinancingfeesandevaluationofdebtcapacity
l Measuretheriskandreturntradeoffsandtheeffectivenessofcovenants,cashflowtraps,seniorand
subordinateddebtissues,financemodels
l Addresshowtimeseriesmodelscanattachmathematicalconceptstoevaluationofrisk
l ApplyMonteCarlosimulationstomeasuretheprobabilityofdefaultandthelossgivendefaultinthe
modelusingalternativefinancialstructures
Supportedby:
Agenda
Day1
IntroductionandModelStructure
RiskMeasurementandFinancialModeling
Entertwoinvestmentsandcompareprojectfinancetocorporatefinanceevaluatetwodifferent
l
renewableprojects
l Introductiontoshortcutkeysusedbyinvestmentbanks,effectiveuseofdatatablesanduseofformsin
excel
l ComputationofDSCRandIRRoninvestmentversusNPVrulesforcorporatefinance
l Useofswitches(TRUE/FALSE)formodelflexibility
l Spreadsheetlayoutstyleandconventionsincludingtechniquestocolorinputcells,limitthesizeof
spreadsheetsthroughgroupingcells
StructuringandBuildingaBasicProjectFinanceModel
l Developageneralmodellayout
l Inputsforprojectphases,operationalassumptionsandfinancingassumptions
l Fundamentalstructureofanyprojectfinancemodelsourcesanduses,debtschedule,assetschedule,
profitandlossfortaxes,cashflowwaterfall,balancesheet,summarypage
DetailsofModelStructure
l Periodcodeforpreconstructionandconstruction
l Switchesforconstructionandoperationalphases
l Workinganalysisforcomputationofconstructionexpenditures,revenuesandexpenses
l Sourcesandusesdetailsincludingmultipledrawdownsofdifferenttypesofdebtfacilities,interestduring
constructionandequityfunding
l Debtschedulewithalternativerepaymentoptionsincludinglevelrepayment,annuityrepaymentand
sculptedrepayment
l Assetschedulewithinterestduringconstructionanddepreciationexpense
l Profitandlossscheduletocomputeincometax
l Cashflowstatementwithbasicwaterfall
l EquitycashflowandequityIRR
l CashflowavailablefordebtserviceandDSCR
l Balancesheetandmodelverificationincludingsetoftestsfordebtrepayment,assetbalanceandbalance
sheet
PresentationofModelandRiskAnalysis
l Sensitivityanalysisfordelay,capitalexpendituresensitivityandrevenuesensitivitywithalternativedebt
levels
l Useoftechniquestoeffectivelymakegraphicalpresentationspresentationofcashflowanddebtservice
todiscussnotionsofdebtservicebufferandtail
l UseofMATCHandINDEXfunctiontocomputebreakevenpoints
DebtStructureandCashFlowWaterfallExercises
DebtSizingandCapacity
l UseofmacrowithVBAtoeffectivelycomputedebtsizegivenDSCRcriteria
DebtStructuringusingAlternativeRepaymentTechniques
l Illustrationoftheimportanceofdebtstructure
l UseofINDEXfunctiontoallowalternativedebtrepaymentscenarios
l Scenarioanalysisforallowingleveloramortizingdebt
l UseofPPMTfunctionandmacrotocomputeamortizingdebt
DebtSculptingusingSolverandMacro
l Discussionofsculpting
l ComputationofsculpteddebtrepaymentusingSOLVER
l ComputationofsculpteddebtrepaymentusingformulaandMacro
l Sensitivityanalysiswithdifferentdebtrepayment
l EffectsofdebttenoranddebtstructureonequityIRRandDSCR
l UseofVBAversusdatatablesforscenarioanalysis
Day2
ModelStructuringIssuesDetailedModel
MonthlyConstructiononaMonthlyBasiswithDelayandLiquidatedDamage
l Setupofdetailedmodelwithspecificdatesforfinancialclose,commercialoperation,andproject
retirement
l Setupofperiodsinmodel(monthlyduringconstructionandsemiannualafterconstruction)
l Setupofdetailedoperatingassumptionswithvaryinginflationratesandgrowthrates
l Setupoffinancialassumptionsincluding
l Multipledrawdownsindifferentcurrencies
l Useofdebtcommitmentratherthandebtleverageassumptions
l Inclusionofupfrontfeesandcommitmentfees
l Alternativerepaymentoptions
l Dividendlockupcovenants
l Cashflowsweeps
l Debtservicereserveaccounts
l Varyingcreditspreads(withDSCRorlifeofproject)
ComputationofPeriodsandDates
l Computationofmonthsinperiodfromtheconstructionandoperationswitches
l Useofperiodcodesfromconstructionstartdate,completiondateandretirementdate
l UseofEDATEandEOMONTHfunctionstomodelstartandenddatesforeachperiod
l ConversionofperiodicmodeltoannualmodelusingSUMIFfunction
ComputationofWorkingAnalysis
l Developmentofgrowthratesusingdailycompoundingwithdifferentperiodicassumptions(cannotuse
simplegrowthindices)
l UseofMATCHandINDEXformodelingvaryinginflationrates
DetailedConstructionPeriodModeling
l Computationofinterestduringconstructionwithandwithoutcapitalizationofinterest
l Modelingdebtdrawsusingdebtcommitmentanddrawdownschedule
l AlternativemodelingofScurveduringconstruction
l Modelingofuncommitteddebtandcommitmentfees
l Modelingofconstructionanddrawdownsinalternativecurrencies
l Inclusionofdebtservicereservesinusesoffunds
DetailedDebtScheduleModeling
l Computationofcommitmentaswellasdebtbalance
l Addingtotaldebtborrowedline
l Provisionforcashfollowsweeps
l Calculationofinterestwithdifferentperiodicassumptions(monthly,semiannually)usingDAYS360
function
l UseofDebtrepaymentswitch
l ComputationofdebtoutstandingafterscheduledtenorusingSUMPRODUCTwithperiodtest
l Incorporationofvaryingcreditspreads
ReserveSection
l Computationofrequireddebtservicebalancewithexpirations
l Computationofneededtoupsthroughcomparingopeningbalancewithrequiredbalance
l Additionofprovisionsforreducingaccountthroughwithdrawlsduringcashflowdeficits
l Settingupthecashlockupaccount
l Inflowsintocashlockupaccountforcovenantviolations
l Outflowsfromcashlockupaccountwhencovenantsmet
l Operatingreserveaccount
l Difficultyofcomputingoperatingreserveaccountwithinflationandperiodicoutflows
DetailedAssetModeling
l Basicassetbalanceschedules
l Useoftaxversusbookdepreciation
l Computationoffeebalanceinsimilarmannertoassetbalances
l Separationintodifferentassetcategories
DetailedProfitandLossStatement
l Inclusionoffeeamortizationandinterestincomeprovisions
l Computationofnetoperatinglossfortaxcalculations
DetailedCashFlowStatementwithCashFlowWaterfall
l OperatingcashflowsfromEBITDAandtaxespaid
l Inclusionofconstructionperiodcashflowsincashflowstatement
l Begincashflowforwaterfallwithsubtotal
l Removecashflowputintooperatingreserveaccount
l ComputationofdefaultsandrequireduseofdebtservicereserveaccountusingMAXandMINfunctions
l ComputationofcashavailableforcashsweepandcashsweepsusingsubtotalsandMINfunction
l Computationofcovenantsusingswitchtodeterminewhethercovenantisviolated
l Calculationofcashflowsweepforsubordinateddebt
ComputationandBasisforLLCR,PLCRandAverageDebtLife
l ReasonforLLCRwithcashflowsweeps
l ProblemswithLLCRforuseincovenants
l ComputationofLLCRandPLCRusingSHIFT,CNTL,ENTER
l CalculationofAverageLoanLifewithPeriodicModel
AlternativeSpecificationsoftheDebtServiceCoverageRatioandIRRs
l UseofXIRRandMIRR
l AlternativespecificationsofDSCR
l SeniorandsubordinatedDSCR
Day3
RiskAnalysisfromAlternativePerspectives
EconomicValueDriversinProjects
l Calculationofvolatilityandconstructionofdownsidecases
l Developmentofscenarioanalysisforkeyvariables
l Useofdownsidecasetodefinedebtcapacity
SensitivityAnalysisandFlexibleGraphs
l UseofOFFSETfunctiontocreateflexiblerangenames
l Incorporationofflexiblerangenamesingraphs
l Extendingscenarioanalysistocomputespiderdiagrams
l Creatingtornadodiagrams
ReFinancing
l EconomicsofRefinancing
l Discussionoftheimportanceofrefinancingforsomeprojects
l Optionaspectsofrefinancing
l SoftnessofequityIRRwithrefinancing
StructuringaModelforReFinancing
l Creationofbasicmodeltodemonstraterefinancingissues
l Inputsforrefinancingdateofrefinancing,DSCRtosizerefinancing,termofrefinancing,interestrate
onrefinancing,feesforrefinancing
l Switchesforrefinancingprerefinancingandpostrefinancing
l Sourcesandusesforrefinancing
l Retirementofexistingdebtandbreakagefees
l IncorporationofinterestandrepaymentsofrefinanceddebtinP&Landcashflow
l Incorporationofproceedsfromnewdebtanddividendsfromrefinancing
l Sensitivityanalysisforfindingoptimalrefinancing
CreditSpreadsandMonteCarloSimulation
l Theoryofcreditspreadsandprobabilityofdefault
l SimpleanalysisofminimumcreditspreadusingMonteCarlosimulation
l ComputationofsimpleMonteCarlowithoutmacros
l UseofsimplemacroforMonteCarlo
l IncorporationofMonteCarlointootherspreadsheets
l Additionofinputsformeanreversionandboundaryconditions
l Problemswithsimulation
Abouttheinstructors
Edhascreatedinnovativeforwardpricing,productivitymeasurementandinvestmentvaluationsoftwarefor
consultingclientsthroughouttheUnitedStates.Hehastaughtenergyeconomicsandfinancethroughoutthe
world,andformulatedsignificantgovernmentpolicyandcorporatestrategyintheU.S.
Hisconsultingclientsincludeinvestmentbanks,commercialbanks,researchinstitutionsandgovernment
agenciesonawidevarietyofcomplexvaluationandadvisorymatters.Hehasconstructedauniqueframework
forelectricitypriceforecastingandvaluationusingproductioncostmodellingtechniquescombinedwithoption
pricetheoryandMonteCarlosimulation.
HeisalsoanadjunctprofessoratleadingUniversitywhereheteachescoursesinmicroeconomics.Alongwith
hispracticalexperiencethatcoversamultitudeofmajoradvisoryprojects,hehastaughtspecialisedcourses
infinancialmodelling,electricitypricing,optionvaluation,mergersandacquisitionsandcontractingto
investmentbanks,commercialbanks,industrialcorporationsandelectricutilitycompanies.
HewasformerlyVicePresidentattheFirstNationalBankofChicagowherehedirectedanalysisofenergy
loansandalsocreatedfinancialmodellingtechniquesusedinadvisoryprojects.Hehasusedthemodelsin
providingexperttestimonyonsubjectsrangingfromcapitalstructuretoinvestmentsinmultibilliondollar
nuclearplantstocomplexvaluationofnewinvestments.
HereceivedanMBAdegreespecialisingineconometrics(withhonours)fromtheUniversityofChicagoanda
BSdegreeinfinancefromtheUniversityofIllinois(withhighestuniversityhonours).Hehaswrittenmany
articlesandisintheprocessofcompletingatextbookonvaluationofelectricityassets.
Coursesrunbythisinstructor
AdvancedProjectFinanceModelling
Venue
RiodeJaneiro,RiodeJaneiro,Brazil
ThisprogramtakesplaceonanonresidentialbasisatacentralRiodeJaneirohotel.Nonresidentialcourse
feesincludetrainingfacilities,documentation,lunchesandrefreshmentsforthedurationoftheprogram.
Delegatesareresponsibleforarrangingtheirownaccommodation,however,alistofconvenienthotels(many
atspeciallynegotiatedrates)isavailableuponregistration.
WhoShouldAttend
CorporateFinance/CorporateTreasury
CapitalMarkets
Audit/ProductControl/RiskManagement/ALM
ResearchandAnalysis
SalesandTrading
InvestmentManagement
Origination
Securitisation/Syndication
StructuredFinance
MoneyMarkets/Repo
SystemsProgramming
Funding
Government/AgencyFundingandInvestment
Regulation/Compliance/Documentation
WhyUs
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