Debt sculpting
Service shaped to CFADS at a target DSCR.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: debt sculpting.Updated 30 September 2026
What it does
Project debt is sized to coverage, not to a multiple. Debt service in each tenor period is set to that period’s CFADS divided by the target DSCR, so the repayment profile follows the cash; the loan that schedule supports is its present value at the loan rate; interest is charged on the opening balance and principal is whatever is left of the service. Written this way the schedule is closed-form and the balance closes to zero at maturity as an identity.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 18–21: All-in interest rate, % a year, Sculpting DSCR, Distribution lock-up DSCR, Debt service reserve, periods of forward service
- Debt, rows 6–9: Debt outstanding this period (1), Sculpted debt service, Interest rate per half-year, Debt supported = present value of sculpted service at the loan rate
- Debt, rows 12–17: Opening balance, Drawn in construction, Interest on the opening balance, Principal repaid…
What a reviewer looks for
- A flat amortisation profile on lumpy cash flows, which wastes debt capacity in strong years and breaches coverage in weak ones.
- Sculpting to a case that already includes the tax shield of the debt being sized, so the sheet iterates and nobody says so.
- Reporting average DSCR without the minimum.
Learn it, then build it
Read · Guide · 12 min
Project Finance Modelling: Cash Flow Waterfalls, DSCR Sizing and the Debt Sculpt
Read · Guide · 11 min
Credit and Covenant Modelling: What a Lender Actually Tests
Vocabulary: Debt Sculpting, DSCR (Debt Service Coverage Ratio).