Advanced Corporate Credit

BENEFITS

To revise and enhance analytic skills in order that participants will become:

Structured and focused in their approach to analysing corporate credit risk
More effective in assessing the success of a company’s business model and the appropriateness of a company’s capital structures (i.e. the degree of liquidity and the ability to service debt)
Better equipped to critique the terms and conditions of credit instruments to ensure that they reflect the commercial needs of the business and protect the debt provider’s position.

The course makes extensive use of case studies, live examples and exercises to ensure that the training is highly interactive, practical, topical and challenging. Case studies are drawn from a number of countries and industries and provide participants with the opportunity to practice the application of the analytic frameworks and tools in context of real situations. The emphasis is on developing critical judgement; participants are required to be focused, practical and realistic in their approach.,

OUTLINE

PURPOSE~ PAYBACK MODEL: A STRUCTURED ANALYTIC APPROACH

A 4-step approach to credit analysis: Purpose, payback, risks and structure
Purpose: identifying the borrower and the potential for structural subordination
Assessing repayment sources: refinancing / access to markets, cash flow profits, market value of assets and third party support
Risks to repayment: identifying sector, management, business and financial risk
Structure: evaluating the risks in the exposure profile, ranking, safeguards and pricing.

STEPS 1 AND 2: PURPOSE AND PAYBACK

Purpose: Payback: the challenges to identifying and analysing credit risk.

RATINGS AND RELATIVE VALUE

Overview: understanding corporate credit ratings
Understanding how credit ratings impact market access and debt structures
The impact of economic cycles on default and recovery rates
Using default and recovery statistics to evaluate an appropriate level of return (risk adjusted return on capital)
Understanding why instruments might trade “outside” their rating.

STEP 3: RISKS TO REPAYMENT

The operating environment

Statement logic: Understanding how the business dynamics impact the asset configuration, funding structure and earnings of companies in different sectors
Analysing sector drivers: structure, key competitors and the outlook for growth, earnings and cash flow
Assessing the characteristics necessary for industry success and a company’s ability to create and sustain a competitive advantage.

EVALUATING BUSINESS RISK

Assessing commercial viability: asset investment and earning dynamics

Evaluating the business model: a practical approach to assessing the success of management’s strategy
Use of peer analysis to bench-mark performance: focusing on ratio and cash flow to analyse asset efficiency
Quantifying performance looking beyond EBITDA: defining, calculating and using operating cash flow to analyse profitability
Assessing a company’s ability to sustain profitability and cash flow through economic and business cycles
Different accounting conventions: looking beyond the numbers and uncovering misleading accounting practices.

Forecasting the business requirements

Using qualitative and quantitative analysis to assess future performance

Assessing forecasts of operating performance and asset investment requirements.

EVALUATING FINANCIAL RISK

Evaluating financal strategy

Using business risk to gauge the appropriate level of financial risk
Identifying an acceptable candidate for leverage
Understanding a company’s financial strategy: ratings targets and shareholder considerations
Corporate treasury objectives: tenor matching, funding and liquidity needs
Credit strength and its impact on access to markets.

Measuring financial risk – liquidity

Assessing liquidity and a company’s financial flexibility: on and off balance sheet and cash flow indicators
Understanding the limitations of traditional liquidity measures (current ratio, quick ratio and working capital)
A practical approach to evaluating liquidity – identifying a company’s short term sources and uses of cash (base case, best case and downside case)
Using the liquidity analysis to determine the need for refinancing
Determining the causes of a liquidity squeeze and anticipating a company’s ability to react (e.g., access to capital, ability to sell non-strategic assets, third party support).
Measuring financial risk – solvency Measuring solvency: leverage ratios versus cash flow measures
Understanding financial risk: the limitations of traditional ratio analysis
Using cash flow statements to determine debt servicing ability
Using discounted cash flows to quantify a company’s debt capacity
Anticipating future borrowing requirements and reliance on market access and refinancing.

Understanding the credit implications of various forms of capital

Debt products: distinguishing features of strong versus weak credits
Understanding the effects of market demand on access to capital, the degree of structural protection and the impact on pricing
Understanding how other forms of capital may enhance or diminish a creditor’s position
Commercial paper: the benefits and the risks
Bank debt versus bonds: terms and conditions compared, understanding how bondholders are potentially at risk to subordination by bank lenders
Off balance sheet financing: the implications for other debt providers
Equity: understanding the difference in viewpoints (upside and downside returns).

Assessing management and shareholders

Management competence: how to evaluate and measure performance
Corporate aims and goals: their effect on the company’s future creditworthiness
Evaluating the shareholder structure, the level of support and the degree of influence.

STEP 4: DEBT STRUCTURE

Framework for assessing the structure of a debt instrument: debt profile, seniority, safeguards and pricing
Seniority: identifying the borrower and the potential for subordination
Challenges to uncovering ranking and maintaining seniority.

APPLIED ANALYTICS: COMPLEX CASE STUDY

Part I: Assessment of historical performance

Identifying the use of proceeds
Determining the sources of repayment
Review of the operating environment and the impact on the company and its peers
Commercial viability: determining the success of the business model relative to peers
Funding structure: assessing the company’s historical ability to service debt and meet non-discretionary expenditures.

Part II: Evaluating sources of repayment

Looking for indicators of quality and value
Assessing existing liquidity
Determining the ability to repay
Evaluating future cash flows

Part III: Conclusions

Quantifying the key sensitivities and their impact on the ability to service debt
Conclusions on the credit outlook and the key risks to taking credit exposure.

TRAINING METHOD

Presentation
Discussion
Case Study
Evaluation

INSTRUCTOR

HERRY ACHMAD BUCHORY, SE,MM.

TIME

Tanggal 04-06 Agustus 2015
Tanggal 15-17 September 2015
Tanggal 20-22 Oktober 2015
Tanggal 03-05 November 2015
Tanggal 15-17 Desember 2015

PLACE

JAKARTA
BANDUNG
YOGYAKARTA
BATAM
SEMARANG
SURABAYA
DENPASAR
MEDAN
DLL

TRAINNING FEE

Rp 7.000.000,-/person/Non Recidential

FACILITIES

Training Kit
Handout
Certificate
Lunch + 2 X Coffee Break
Souvenir
Pick Up Participant

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