Corporate Credit Risk Analysis School

Name: Corporate Credit Risk Analysis School
Availability: InStock

An intensive 3-day course combining practical financial analysis, credit risk assessment and strategic advisory skills

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A three-day course presented in London

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In-house pricing available – often more cost-effective for teams of 10+

Download: Course Outline

Develop practical skills in financial statement analysis and credit risk assessment to evaluate corporate borrowers more effectively
Strengthen your ability to assess corporate creditworthiness and lending risks using structured analytical approaches
Enhance your capability to provide strategic advisory insights alongside credit analysis in lending or investment decisions

The course will run in Central London over 3 days, from 09:30 to 16:30, with a lunch break and two coffee breaks.

Day One

Section 1: Quantitative Analysis: How to Assess the Group’s Credit Profile Using Financial Statements and Notes

1.1 Revenues, earnings and net finance expense

Recommended adjustments to reported financial metrics to help gauge a firm’s true credit profile
Analysing revenue trends – what is driving growth or decline?
What trends, risks and opportunities do the divisional and geographical analysis show?
Assessing underlying earnings and EBITDA
Adjusting for exceptional and non-recurring items, equity accounted profits/losses and non-cash and non-core earnings
Adjusting reported finance expense for capitalised interest, PIK interest, discontinued items, on and off balance leases, hybrid securities, etc
Adjusting reported finance income
The impact of IFRS 18, effective Jan 2027
What are the key risks and trends in the income statements?
Does the statement of other comprehensive income give any insights?
What are the credit implications of the firm’s dividend and share buyback policies?
Case studies: calculating key financial metrics; adjusting and calculating key credit ratios (growth, margins, interest cover, dividend cover)

1.2 Analysing key line items in the statement of financial position

Understanding the group’s asset base and capital intensity
How is the asset base funded, and what improvements could be made?
What are the firm’s investment requirements, and how should these be funded?
Understanding the group’s net working capital requirements, including seasonality
How is NWC funded, and how could this be improved?
Analysing the firm’s financial liabilities, quasi-debt and non-financial liabilities
Making adjustments to reported net debt for on and off-balance sheet leases, retirement deficits, derivatives, discontinued items, hybrid securities, off-balance sheet amounts, reverse factoring, put options, securitised assets and financial assets, etc
Analysing debt capacity, the debt maturity profile, the debt currency profile, sources of borrowings and exposure to changes in interest rates
Dealing with overdue liabilities (tax, suppliers, VAT) and provisions
Assessing liquidity sources and uses, and the scope for a liquidity crisis
Understanding the book value and market value of equity
What are the key risks and trends in the balance sheets?
Case studies: calculating key financial metrics; adjusting and calculating key credit ratios (asset turnover, ROIC/ROCE, leverage, liquidity, net working capital efficiencies)

1.3 Analysing key line items in the cash flow statement

The impact of IFRS 18, effective January 2027
Defining different measures of cash flow
Moving from earnings to operating cash flow
Understanding the key sources and uses of cash flow and the credit implications
Is operating cash flow sustainable? How much is derived from NWC changes and one-off sources?
Can the firm cover interest, tax, investment spending, provisions and dividends?
Reorganising the cash flow statement to calculate key measures of cash flow
Reviewing the investing section – adjusting for leases and long-term financial investments
Reviewing the financing section – adjusting for leases, assessing margin calls and analysing sources of funding
Case studies: Calculating key financial metrics; Adjusting and calculating key credit ratios (interest cover, debt service cover, dividend cover, investment cover, cash flow generation efficiency, liquidity, dependence on external funding)

1.4 Spotting red flags in financial statements

Differentiating between accounting fraud, aggressive accounting and incompetent accounting
What is the purpose of the fraud or aggressive accounting?
Common red flags in the income statement
Common red flags in the balance sheet
Common red flags in the cash flow statement
Qualitative red flags
Can AI help spot creative accounting?
Case study: delegates are given a range of financial statements and try to spot qualitative and quantitative red flags

Day Two

Section 2: Using Historic Performance Analysis & Client Budgets for Forecasting

Analysing underlying historic performance; divisional analysis, adjusting for M&A, disposals, currencies
Evaluating the key value drivers of earnings and cashflows (revenues, divisional analysis, operating leverage, fixed and variable costs, commodities, currencies, customer concentration, other operating income, equity accounted entities, NCI, interest rates, hedging, taxation, dividend payout rates, capex, NWC, leases)
Using management budgets and forecasts - are they too optimistic?
Can historic results be extrapolated into the future?
What are the factors that cause deviations from historic trends? (M&A, disposals, other strategic initiatives, change in the scope of consolidation, macro and industry changes)
Including the impacts of new management initiatives
Understanding and applying operating leverage
The impact of maturing fixed-rate debt and interest rate changes
Case studies: reviewing and adjusting 3-statement financial models
Running scenarios based on the key cash flow drivers and risks
Running scenarios based on different capital structures

Section 3: Understanding Corporate Value Creation and Strategic Drivers

3.1 How clients create value-added and make investment decisions

How relationship managers can discuss with clients the company’s performance, investment initiatives and strategic outlook
How to interpret management discussions and the annual report narrative
How to translate financial insights into client discussions – examining the link between strategic decisions, profitability, and valuation metrics
Framing questions for company meetings to explore strategy, budgeting, and value creation
Understanding the firm’s value creation levers, such as pricing power, competitive advantages, brand power, customer service, cost advantages, growth initiatives, cost of capital, reinvestment discipline, innovation record, distribution network, patents, licences, regulatory advantages, related party relationships, etc
How management teams allocate capital, set targets, and measure value
Different models of measuring value creation, including growth, EVA and ROIC versus WACC
Consequences of creating or not creating value for stakeholders
Examples of low and high value creation
What threats does the firm face in terms of its continued ability to create value?
Does the firm understand these risks? How will it address them?

Day Three

3.2 Understanding qualitative differences between different segments or industries

What are some of the key qualitative differences across different industries and segments?
Factors to focus on include creating value-added, key success factors, capital intensity, product life cycle, customer preferences, risk factors, ESG and AI exposures, barriers to entry, competitive forces, growth outlook and cash flow generation
Is the segment homogenous or are there wide differences between firms within the same segment?
Are these factors expected to change in the future? What is driving any changes, and what are the implications for credit quality?
Comparison of key differences between different sectors, such as industrial, telecos, retail, tech, services, and construction

Section 4: Complex Group Structures

4.1 Complex group structures

Defining complex group structures
Structural subordination and double leverage
The credit and rating impacts of partial ownership, a high level of NCI, and off-balance sheet entities
Proportional debt, earnings and cash flow of entities that are not wholly-owned
Who owns/controls the debt, assets, earnings, and cash flows?
The impacts of different consolidation methods and how to make adjustments
The credit and rating impacts of different types of subordination
The credit and rating impacts of security packages
Case studies: reviews of complex group structures; assessing the rating notching implications of different group structures

Section 5: Debt Structuring

5.1 Financial objectives and achieving an optimal capital structure

What are the firm’s financial objectives?
Are they realistic?
Defining an optimal capital structure
Reviewing the advantages and disadvantages of equity and debt
Defining enterprise value and equity value
Overview of WACC
The cost of debt and equity
Adjusting WACC for multi-national groups
Factoring in sovereign risk to the cost of debt and equity
Case studies: Calculating EV and equity values; practising ke and WACC calculations

5.2 Debt capacity and debt tranches

What is the firm’s debt capacity?
Theoretical debt capacity versus market reality and constraints
Sources of debt service and repayment
Capital layering – using mezzanine and subordinated debt
Factoring in HC debt and double leverage
Who should be the borrower – HC, OpCo, or other?
Using off-balance vehicles and products
Assessing repayment capacity for amortising debt
How will new financing change the firm’s capital structure, WACC, eps, and credit ratings?
Case studies: Using a financial forecasting model to change the firm’s capital structure and assess the impacts on credit ratios. Undertaking scenario analysis to stress test the cash flow forecasts.

Section 6: Overview of Analysing Distressed Firms

6.1 Early warning signs of distress

Overview of recent trends in downgrades, defaults, and distress rates
Background and definitions
Causes of distress and common early warning signs
Macro and sector signals; event risks
Analysing the financial statements and notes of distressed corporates
Income statement and operational signs
Cash flow signs - prospective and actual liquidity
Balance sheet signs
Case studies: spotting early warning signs and analysing distressed credits

6.2 What to do in the event of distress and potential restructuring solutions

Is it a liquidity problem, a leverage problem or a viability problem?
Speculative grade liquidity ratings
Acting on early warning signs if there is no covenant breach
Amendments and waivers
Advantages and disadvantages of calling an event of default
Options for restructuring and recovery
Does the firm have any residual equity value?
Could it have a positive equity value in the future?
Is it worth saving? Should the lenders advance additional funding?
Operational restructurings
Debt and equity restructurings
Case studies: modelling new borrowing facilities and debt restructuring solutions for distressed firms

Course summary and close

This Corporate Credit Risk Analysis course trainer has worked as a financial trainer for over ten years for many major financial institutions in Europe, Asia, the Middle East and Africa. She trains in financial and credit analysis, company valuation, financial modelling and distressed debt. The delegate profile ranges from graduates to board members. She has a degree in economics from the London School of Economics and stock exchange qualifications from London and New York.

Before her career in financial training, she spent seventeen years working as an investment banker in Europe and the US. She started her career as a graduate trainee at Kleinwort Benson and later became an Executive Director of CSFB and Lehman Brothers. She has principally worked in the credit markets with experience in the US and European high grade and high yield markets, the European new issue markets, the Asian convertible bond markets and corporate restructurings of distressed credits.

She specialised in the telecoms sector and was closely involved in the structuring, raising and/or trading of bank and public debt for telecoms companies in many countries, including Europe, South Africa, Asia and Latin America. She also has extensive experience in corporate finance transactions, including mergers, disposals, privatisations, IPOs and capital raisings. She has also worked as an expert witness in financial lawsuits. She continues to advise SMEs on debt and equity raisings and M&A.

This Corporate Credit Risk Analysis training:

Teaches delegates how to adjust reported financial metrics and calculate key credit ratios from the three financial statements and notes
Helps delegates spot red flags that may indicate creative accounting
Helps you understand how complex group and capital structures impact a group’s credit profile and the implications for rating notching
Assists delegates (particularly the relationship managers) in understanding the importance of qualitative analysis - how clients create and sustain value-added and how clients determine their investment criteria
Master key qualitative differences across different sectors
Know how to advise corporate clients on more complex debt structures, in the context of creating an optimal capital structure
Examine ways of assessing debt capacity
Teach delegates how to analyse the statements of distressed firms and how to spot early warning signs

During the course, we reference and analyse a range of up-to-date case studies across different jurisdictions and sectors.

This programme is designed for a range of finance professionals, including risk managers and credit analysts who analyse and approve credit and counterparty exposures.
It is also intended for relationship/origination managers to help them improve client interaction by understanding the business and creating optimal capital structures.
The course is suitable for professionals with 3+ years of experience.
Typical seniority includes Associate, Associate Director, Vice President and Director.

As the economic outlook continues to remain difficult in Europe and the US, many corporates are facing a range of challenges, including higher interest rates and leverage, low economic growth, the transition to AI, digitalisation and new environmental standards, as well as heightened geopolitical risks. If commercial banks and other lending institutions fail to analyse their credit risk exposures correctly and update their forecasting models, they could be exposed to material credit losses.

This course helps a wide range of credit professionals deal with the analytical, structuring, and forecasting challenges they face today.

We first review key financial metrics (earnings, finance expense, net debt, cash flow, etc.) and credit ratios that help determine a group’s current credit quality and debt capacity. We also analyse complex accounts, group structures and situations, using more advanced analytical and structuring techniques for assessing, limiting and offsetting credit risks.

We also examine debt structuring and how to help a borrower construct an optimal capital structure. We will also assess how to apply notching to layered capital structures. We then analyse how clients create value and determine their investment criteria, to help relationship managers establish a meaningful dialogue with clients about their future funding needs and credit outlook.

Finally, we review how to analyse deteriorating and distressed credits – how to spot early warning signs of a weakening credit profile and how to restructure firms worth saving.

Principal topics covered during this course will include:

Recommended adjustments to reported financial metrics (particularly earnings, finance expense, cashflow and net debt) to help gauge a firm’s true credit profile
Assessing how quasi-debt and other on and off-balance sheet liabilities impact the credit analysis
Key red flags of creative accounting
Adjusting and calculating key credit and performance ratios
Using historic performance analysis and client budgets to help make realistic forecasts
Qualitative risk analysis - understanding differences between sectors in terms of inter alia, creating value added, capital intensity, risk profile, ESG and AI exposures, cash flow generation and key success factors
Complex group structures and how they can improve or worsen credit exposures
Understanding the credit impact of different consolidation methods
Engaging with management - understanding how clients create and sustain value and how clients determine their investment criteria
Engaging with management - debt structuring - helping the client create an optimal capital structure, including debt layering, subject to minimising WACC and to market constraints
Debt capacity considerations
Deteriorating credits, potential and actual NPLs: warning signs and strategies for restructuring the firm and minimising loss