Glossary
What is DSCR-sculpted debt sizing?
Sculpting sets each year’s debt service to that year’s cash flow available for debt service, in the production case the lender underwrites, divided by the target DSCR. Maximum debt is the present value of those payments at the loan rate. It’s a standard project-finance sizing method.
How is it calculated?
- Compute CFADS for each year of the loan in the sizing case, often P90.
- Divide each year by the target DSCR. That’s the most the year can pay.
- Discount those payments at the loan interest rate and add them up:
Debt = Σ (CFADSyear / target DSCR) / (1 + rate)year
If the result exceeds the maximum gearing allowed (a percentage of CAPEX), the cap binds and DSCR ends up above target.
How is it different from level payments?
A level payment has to fit the worst year of the loan, so in every other year DSCR sits above target and that cash goes unused. A sculpted schedule pays more in high-cash years and less in low ones, and holds DSCR at target every year. That’s why, at the same minimum DSCR, it usually supports more debt than level payments when cash flow varies from year to year.
Arithmetic example
A two-year loan at 0% with a 1.25 target DSCR. If CFADS is 1,250 in year 1 and 1,000 in year 2:
- Sculpted: payments of 1,000 and 800. Maximum debt 1,800.
- Level payments: they have to fit year 2, so each payment is 800. Maximum debt 1,600.
What to watch
- Which case you sculpt on. Sculpting on P50 gives more debt, but DSCR drops below target in a P90 year. When you compare cases, remember that lenders often set a different target DSCR for each.
- DSRA and interest during construction. Both change how much equity you need at financial close.
- The P99 stress test: does a very bad year still cover debt service?
Limits
- The example is arithmetic. It doesn’t come from a Heliosolve run, and this page shows no sculpted-debt results from the product.
- The credit agreement sets the inputs. What goes into CFADS, the target DSCR and the maximum gearing vary from deal to deal.
- One senior debt tranche. Heliosolve doesn’t model multiple tranches or tax equity structures.
- No track record with lenders yet. The product prepares the independent engineer’s work; it doesn’t replace it.
→ Full methodology: P50 vs P90: the number your debt is sized against.