DSCR Covenant
Short definition
A DSCR covenant requires CFADS / debt service not to fall below a contractual floor. The floor is not universal; cash-flow stability, sector and the lender set it.
Detailed explanation
The CFADS definition and which service counts (interest+principal, rent, hedges) are locked in the pack. Project finance may test historical and annual DSCR separately.
An ICR covenant ignores principal; DSCR breaks earlier in a principal year. A forward DSCR assumption is not the test until it is actual.
Why it matters for the CFO
It is the legal cap on cash-paying power. If the EBITDA covenant is green and this is red, talk inventory or principal.
How it is calculated
Test: DSCR ≥ Asgari düzey (asgari paket ve kredi politikasına göre değişir)
Variables in the formula
- Min DSCR: Contractual DSCR floor
How to read it
A 1.20x floor with 1.35x actual is 0.15x headroom. 1.20x is not a universal “safe” line; it is that pack’s floor.
Numerical example
CFADS 150 mn TL, service 100 mn TL, floor 1.20x → DSCR 1.50x, headroom 0.30x.
Related calculators
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.