Two structures, one minimum DSCR, different risk.
Two assets can both report a 1.31x minimum and carry nothing like the same exposure. The minimum does not distinguish them. The shape does.
The profile completes the number.
Both profiles reach 1.31x. In the second, headroom remains narrow for much of the term.
Minimum: 1.31x · Threshold: 1.20x
View the values for all 15 years
| Year | DSCR (times) |
|---|---|
| 1 | 1.61x |
| 2 | 1.60x |
| 3 | 1.31x |
| 4 | 1.58x |
| 5 | 1.60x |
| 6 | 1.62x |
| 7 | 1.61x |
| 8 | 1.60x |
| 9 | 1.59x |
| 10 | 1.62x |
| 11 | 1.63x |
| 12 | 1.61x |
| 13 | 1.60x |
| 14 | 1.62x |
| 15 | 1.64x |
Minimum: 1.31x · Threshold: 1.20x
View the values for all 15 years
| Year | DSCR (times) |
|---|---|
| 1 | 1.60x |
| 2 | 1.58x |
| 3 | 1.38x |
| 4 | 1.36x |
| 5 | 1.34x |
| 6 | 1.33x |
| 7 | 1.31x |
| 8 | 1.32x |
| 9 | 1.34x |
| 10 | 1.35x |
| 11 | 1.36x |
| 12 | 1.37x |
| 13 | 1.38x |
| 14 | 1.56x |
| 15 | 1.60x |
Illustrative profiles. The same minimum, a different duration of exposure.
One number, two very different projects
In the first asset the minimum occurs once, in year three, and every other year sits above 1.55x. In the second, eleven of the fifteen years sit between 1.31x and 1.38x.
Both report the same minimum, but the second has limited headroom for eleven years. A sustained reduction in cash flow could breach the threshold in several periods. Any restriction on distributions would depend on the financing documents.
The minimum identifies the period with the least coverage. It is useful for checking a threshold; the full profile adds the timing and duration of limited headroom.
What a single minimum cannot tell you
- How many periods sit within a small margin of the covenant
- Whether tight periods occur early or late in the debt term, and what refinancing options exist then
- Whether the minimum is structural or an artefact of one period's timing
The last one carries more weight than it sounds. A minimum caused by a single reserve account movement or one major maintenance year is a scheduling question. A minimum caused by the shape of the revenue curve is a structuring question. Same number, different conversation, and the model should make clear which one you are having.
A more useful summary setshow the working
What a sculpted base case tells you
When debt service is set as CFADS divided by a constant target DSCR, coverage equals that target by construction. Gearing limits, repayment constraints and cash-flow adjustments can change that profile. The base case shows how the structure was sized.
To examine resilience, keep the agreed repayment schedule fixed and change the cash-flow assumptions. The resulting profile shows where the original debt structure loses coverage.
Review the base case alongside relevant downside sensitivities, with the closing debt schedule held fixed.
Report the shape of the downside
Show the full ratio profile across the debt term under stress, mark the covenant, and state how many periods sit within 0.10x of it. One chart and one sentence, and it changes what the committee argues about.
Send the coverage profile
Share the project context and coverage profile. We can discuss which sensitivities and financing terms need closer review.