Leveraged Finance

Underwrite leveraged debt from the lender's perspective: test business quality and cash flow, select instruments, challenge documentation and defend a credit-committee recommendation.

40 applied underwriting questions · Worked answer frameworks · Practical follow-ups

Your route through the course

Know what comes next.

Each section teaches one defined skill set, followed by a short test before the next section unlocks.

0 of 5 lessons passed0/50 course XP

Section 1 · 14 min

The leveraged-finance underwriting lens

Move from describing leverage to forming a defensible view on business quality, cash generation and repayment risk.

An LBO combines equity with borrowed money.Build the £100m purchase price.Lenders don’t own the business.Different facilities solve different funding needs.Debt paydown can build equity value.Start with the business before calculating leverage.Translate Porter's Five Forces into cash risk.Give a credit view, not a list of ratios.

Locked

Test 18 applied questions6/8 required to pass · Immediate explanations · 10 XP

Section 2 · 16 min

Debt instruments and capital-structure design

Select and compare RCFs, TLAs, TLBs, unitranche, high-yield bonds and acquisition facilities using risk, flexibility and execution criteria.

Ranking determines who gets paid first.Security improves recovery—not certainty.Calculate gross leverage by layer.Ranking also drives control.Don’t compare margins without comparing position.TLA, TLB and unitranche solve different problems.A committed ACF isn't always fully drawable.Recommend a structure and defend the trade-off.

Locked

Test 28 applied questions6/8 required to pass · Immediate explanations · 10 XP

Section 3 · 17 min

Debt capacity, cash flow and downside modelling

Size debt from sustainable cash flow, model cash and PIK interest, and distinguish operating headroom from covenant headroom.

Debt capacity is constrained by the weakest test.Start with leverage, then challenge it.A 20% EBITDA decline changes the answer.Covenants are early-warning tripwires.Headroom isn’t the same as capacity.Normalise EBITDA before converting it to cash.Model cash interest, PIK and base-rate exposure separately.State the size, constraint and downside consequence.

Locked

Test 38 applied questions6/8 required to pass · Immediate explanations · 10 XP

Section 4 · 17 min

LBO mechanics, covenants and creditor control

Build sources and uses, trace debt repayment and understand how the SFA and ICA control leverage, value leakage and enforcement.

Every pound of use needs a source.The equity cheque is the balancing figure.EBITDA doesn’t repay debt by itself.Mandatory and optional repayment behave differently.A balancing model can still be wrong.The SFA turns the approved credit into enforceable terms.The threshold alone doesn't tell you the protection.The ICA determines who controls a default.Explain the protection and the loophole.

Locked

Test 48 applied questions6/8 required to pass · Immediate explanations · 10 XP

Section 5 · 18 min

LBO returns and the credit-committee decision

Connect deleveraging to sponsor returns, then deliver a clear approve or decline recommendation with conditions and downside protections.

Equity receives value after debt.The sponsor doubles its money.Separate operating delivery from financial engineering.The lender underwrites repayment, not sponsor upside.Approve assumptions, not just outputs.MOIC measures money; IRR also measures time.Lead with a decision and the conditions that make it acceptable.This is what a defensible recommendation sounds like.Know what would change the recommendation.

Locked

Test 58 applied questions6/8 required to pass · Immediate explanations · 10 XP