Banking · Project Finance Metrics
In the context of project finance, lenders often mandate a specific Debt Service Coverage Ratio (DSCR) as a financial covenant. Which of the following best describes the 'Minimum DSCR' requirement?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The average ratio of the project's net operating income to its total debt principal throughout the loan tenure.
- 2The lowest ratio of periodic operating cash flow to the sum of principal and interest payments scheduled for that same period.✓
- 3The maximum threshold of debt-to-equity that the project company is allowed to maintain during the construction phase.
- 4The ratio of the total discounted cash flows to the total project cost evaluated at the end of the concession period.
Correct answer
The lowest ratio of periodic operating cash flow to the sum of principal and interest payments scheduled for that same period.
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