Corporate Credit Risk Analysis Training Course

The pressure is on now more than ever to make sure the right decisions are made where lending is concerned with a heightened emphasis on the possible risks and exposure.

This course has been carefully researched and designed to ensure that delegates have a solid grounding in theory as well as a robust view of understanding corporate credit risk issues.  The material is therefore both intellectually rigorous and practical.

The training approach will be an interactive workshop style with use of exercises and case studies. 

Scroll down for agenda or book onto this course.

Day 1 – QUALITATIVE RISK ANALYSIS

Overview of the Credit Analysis Process

Objective: To establish the basic parameters of the credit risk principles

• Risk and return dimensions
• Country and corporate risk issues
• Credit default rates and risk grading
• Fundamental principles of credit risk analysis
• Balancing the quantitative and qualitative aspects of risk
• A structured analysis framework for credit
• Rating processes
• External rating agencies – Moodys, S&P, Fitch
• Internal ratings applications

Syndicate Case Study: Understanding the principles of credit risk analysing a typical credit application

Current State of the Credit Market

• Current issues regarding structured finance and credit
• Review of changes in light of recent problems

Analysing Business Risks

Objective: To develop a general framework for assessing business risks over a wide range of company types and business sectors

• Macro-environmental risk analysis; cyclical/mature/growing
• Strategic evaluation using stakeholder analysis, four gods of management, PESTI, Porter 5 Forces model
• Assessing competitive position
• Resource audit using 7Ms

Video Case of a UK Corporate: Identifying the credit problems

• Company/product portfolio evaluation and diversification using the product portfolio BCG matrix
• Market environment analysis
• Generic competitive strategies
• Strategic options using Ansoff matrix
• Market/product lifecycle and the 4Ps of marketing
• Value chain and peer group assessment
• Internal operational and management assessment
• Track record, attitude to risk, relationship with shareholders
• Force field analysis and understanding change management issues
• Combining the analysis using a SWOT matrixDeveloping a qualitative analysis framework

Syndicate Case Study: Identifying the business risk issues which caused the problems at Yell

Day 2 – QUANTITATIVE RISK ANALYSIS

Cashflow Risk Evaluation

Objective: To ensure an advanced understanding of historic cashflow analysis, forecast cashflows and the importance in financial risk evaluation

• The dynamic cashflow cycle in a company
• Untangling the cashflow statement
• Linking cashflow and historic ratios
• Evaluating repayment ability on a cashflow basis
• Cashflow cover ratios and repayment risk, EBITDA cover, DSCR and other metrics
• Moody’s and S&P calculation of FFO and use of cashflow analysis
• Calculating cashflows when there is no cashflow statement
• Understanding the cashflow statements of other countries
• Cashflow and corporate capital structure
• Debt versus equity decisions in the capital structure and cashflow impacts
• Developing a model for cashflow projections
• Cashflow sensitivity analysis – identifying the key cashflow drivers
• Linking cashflow generation to strategy and investment decisions
• Key cashflow financial performance indicators

Syndicate Case Study: Analysing corporate cashflow of a corporate credit case and modelling projections using Excel

The Current Corporate Restructuring Climate

Objective: To identify the possible warning signs of corporate distress and understand the possible solutions

• Review of the current problem sectors
• What are the recurrent themes?
• Identifying both the qualitative and quantitative warning signs of corporate failure
• Separating the causes from the symptoms
• Sector specific problems involving restructuring
• Restructuring framework
• Proactive
• Defensive
• Distress
• Legal options
• Differences across different regimes
• Legal reorganisation – in court or out of court solution?
• Stakeholders with special interests – suppliers, pension trustees, leaseholders
• Liquidation, sale or debt restructure
• Role of vulture funds/hedge funds
• Review of the key issues in corporate restructuring
• Liquidity or viability problem?
• Identification of key stakeholders
• Leveraging and deleveraging
• Optimising the leverage structure
• Adjusting the cost of debt and equity for leverage
• Recaps, debt and equity buybacks

Group Exercise: Calculating the optimum leverage and debt capacity of a company

Case Study: Identifying what went wrong in a recent corporate distress case study

Corporate Capital Structure

Objective: To understand the corporate objectives in terms of alternative financing structures, acquisition financing and to appreciate the equity viewpoint when assessing credit risk

• Structuring the junior/senior debt
• Hybrid debt and equity issues in capital structure
• Mezzanine debt structures
• Use of PIK structures
• Warrants and equity ratchets
• Understanding the term structure of risk
• Using asset securitisation structures to obtain off balance finance
• Understanding credit enhancement structures and risk transfer
• Project finance structures
• Acquisition finance

Syndicate Case Study: Analysing the credit risk of a proposed acquisition

After this intensive two-day course you will be able to:

• Grasp the basic parameters of credit risk principles
• Develop a general framework for assessing business risks over a wide range of company types and business sectors
• Show an advanced understanding of historic cashflow analysis and forecast cashflows
• Realise the importance of financial risk evaluation
• Identify the possible warning signs of corporate distress and understand the possible solutions
• Understand the corporate objectives in terms of alternative financing structures, acquisition financing and appreciate the equity viewpoint when assessing credit risk