150. For the purposes of the analysis of the financial position within the creditworthiness …

For the purposes of the analysis of the financial position within the creditworthiness assessment as specified above, institutions should consider the following:

• a. both the current and the projected financial position, including balance sheets and capital structure, working capital, income, cash flow and the source of repayment capacity to meet contractual obligations, e.g. debt-servicing capacity, including under possible adverse events (see also sensitivity analysis) – items to be analysed should include but not be limited to free cash flow available for debt servicing of the facility under consideration;
• b. net operating income and profitability, especially in relation to interest-carrying debt;
• c. the borrower’s leverage level, dividend distribution, and actual and projected capital expenditure, as well as its cash conversion cycle in relation to the facility under consideration;
• d. the exposure profile until maturity, in relation to potential market movements (e.g. exposures denominated in foreign currencies and exposures collateralised by repayment vehicles);
• e. where applicable, the probability of default, based on credit scoring or internal risk rating;
• f. the use of appropriate financial, asset class- or product type-specific metrics and indicators, in line with their credit risk appetite, policies and limits set out in accordance with Sections 4.2 and 4.3, including considering metrics in Annex 3 to an extent that is applicable and appropriate to the specific credit proposal.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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