Much of leveraged finance credit analysis focuses on cash flows. But what happens when the credit you have to look at has no cash flow? What if it is a very early stage credit or a pure start-up project? Then you need to be able to combine the tools of project finance credit analysis with the tools of leveraged finance analysis. The leveraged finance market sees its share of project finance fundings and as an analyst you need to know how to approach these debt instruments. This booklet will guide you through the practical aspects of analyzing the feasibility of a project, building models for the project and analyzing what factors are most likely to influence how the bonds and loans on the project will trade.
Credit Default Swaps (CDS) influence how bonds and loans trade and the relative value between bonds and loans. CDS can be the best way to hedge the risk of a corporate debt position and can also be a valuable investment tool in its own right. CDS has a multitude of nuances to it, from how its structured to how it is priced to how it is traded. If you are going to do analysis of corporate debt, especially in the leveraged finance market, you need to understand CDS. This booklet walks you through the basics of how CDS works, gives some perspective on how it has changed since the 2008 crisis and gives practical examples of how CDS is used and analyzed for corporate issuers. It is a valuable summary for anyone looking to do corporate credit analysis.