Breaking Into Wall Street – Project Finance & Infrastructure Modeling

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Breaking Into Wall Street – Project Finance & Infrastructure Modeling

How to Master Cash Flow Projections, Debt Sculpting, and Infrastructure Asset Modeling – So

You Can Ace Your Project Finance Case Studies and Win Offers

Our approach focuses on the 3 most important points in Project Finance Modeling:

1) Cash Flow Projections

You need to know how to move from energy production or traffic levels to revenue and expenses and how items

such as depreciation, loan fees, and interest factor into an asset’s cash flows.

If you get your units wrong, your offshore wind farm might morph into a nuclear plant and have a meltdown

or two – and you won’t be able to blame it on Homer Simpson!

2) Debt Sizing and Sculpting

Project Finance is fundamentally different from corporate finance because of this focus on sculpting

the Debt to match the asset’s future cash flows.

And you must know how to set up debt sizing and sculpting with standard Excel formulas, Goal Seek,

simple VBA code, and circular reference switches.

3) Investment Recommendations

Finally, you need to understand how to put together all the pieces to make an investment recommendation.

You must be able to read the numbers in the different cases, assess the risk factors, and say “Yes” or “No” to a deal.

Through Project Finance & Infrastructure Modeling, you’ll learn to:

Project cash flows for different types of infrastructure assets, ranging from renewables

to fossil fuels to nuclear to toll roads and airports.

Understand timelines and flags in infrastructure models and how they factor into

debt refinancing, sculpting, and sizing.

Build the key drivers for infrastructure assets, including the links between energy production

under different contract types and revenue

(and, for transportation, the links between GDP, inflation, and growth rates).

Calculate the key metrics for infrastructure assets for both the equity investors and the lenders,

including the equity IRR and cash-on-cash multiple,

the Debt Service Coverage Ratio (DSCR), the Loan Life Coverage

Ratio (LLCR), the Project Life Coverage Ratio (PLCR), and the Levelized Cost of Energy (LCOE).

Sculpt and size Debt properly based on minimum DSCR and LLCR targets – with standard Excel formulas,

Goal Seek, simple VBA code, or circular calculations.

Handle multiple tranches of Debt, such as one tranche with a “merchant tail” and fixed amortization or two tranches

that are both sculpted and sized based on the asset’s cash flows.

Build in reserve accounts, such as the Debt Service Reserve Account (DSRA), Major Maintenance Reserve Account (MMRA),

and Decommissioning Reserve, and analyze their impact on the cash flows.

Model construction periods in development deals, including tricks to avoid the circular references created

by the interest during construction (IDC) and the loan commitment fees.

Use VBA to avoid circular references, size and sculpt Debt properly, build sensitivity tables, and back-solve

for key assumptions such as the proper PPA rates in different scenarios.

Make investment recommendations based on the deal’s expected returns and the key risk factors.