Facility debt: contract-backed term loans and notes
Delayed-draw loans by cohort, DSCR, notes.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: facility debt: contract-backed term loans and notes.Updated 30 October 2026
Part of project finance and infrastructure models, with the models, labs and guides around it.
What it does
Debt secured on contracts rather than on a company. Each cohort of assets has its own delayed-draw term loan, drawn as the cohort is built and sized to the lesser of a loan-to-cost limit and what the cohort’s first contracted year can carry at a sizing DSCR. It is repaid in equal instalments over the contract’s tenor, so the loan is gone when the contracted cash stops, and its DSCR is tested each contract year against a covenant. Corporate notes sit beside the facilities and are repaid at maturity, which is where refinancing risk lives.
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 75–82: Term loan: maximum loan to cost, Term loan: sizing DSCR on the first contract year, Term loan: minimum DSCR covenant, Term loan: interest rate…
- Financing, rows 19–29: Cohort 1: contracted cash flow, first year in service, Cohort 1: loan at maximum loan to cost, Cohort 1: loan at the sizing DSCR, Cohort 1: term loan…
- Financing, row 32: Check: cohort 1 balance - (drawn - repaid to date)
- Financing, rows 35–45: Cohort 2: contracted cash flow, first year in service, Cohort 2: loan at maximum loan to cost, Cohort 2: loan at the sizing DSCR, Cohort 2: term loan…
- Financing, row 48: Check: cohort 2 balance - (drawn - repaid to date)
- Financing, rows 51–61: Cohort 3: contracted cash flow, first year in service, Cohort 3: loan at maximum loan to cost, Cohort 3: loan at the sizing DSCR, Cohort 3: term loan…
- Financing, row 64: Check: cohort 3 balance - (drawn - repaid to date)
- Financing, rows 67–72: Opening balance, Issued, Interest, Repaid at maturity…
- Reported, rows 127–181: DDTL 1.0 Facility, 30 Jun 2026, DDTL 1.0 Facility, effective rate, DDTL 2.0 Facility, 30 Jun 2026, DDTL 2.0 Facility, effective rate…
- Reported, rows 215–217: DDTL 5.5 Facility, commitment, DDTL 5.5 Facility, minimum debt service coverage ratio, 2.875% Convertible Senior Notes due April 2033, principal
- Derived, rows 71–79: Principal by facility, 30 June 2026, Of which recourse to the parent, 30 June 2026, Of which delayed-draw term loans, 30 June 2026, Of which senior and convertible notes, 30 June 2026…
- Debt, rows 15–23: Committed undrawn facilities, opening, Borrowing against the period’s capital spending, Of which drawn on committed facilities, Of which new contract-backed borrowing, still to be arranged…
- Debt, rows 26–28: Debt principal, opening (FY2026E: 30 June 2026), Debt principal, closing, Interest on opening debt (FY2026E: the second half)
- Debt, rows 32–35: Debt principal at the year end, Contract-backed borrowing still to be arranged, second half of 2026 to FY2030E, Memo: debt principal still owed at the end of FY2030E
What a reviewer looks for
- Contract-backed debt amortised over the asset’s life rather than the contract.
- DSCR measured on all revenue when the lender is secured only on the contract.
- One loan for every cohort, so each contract’s coverage cannot be seen.
Learn it, then build it
Build · Lab · ~12 min
DSCR Sculpting
Sculpt debt service to CFADS at a target DSCR, size the loan as its present value, split a payment into interest and principal, and explain why a level repayment profile fails a project lender.
Build · Lab · ~10 min
Covenant Headroom
Compute the three maintenance ratios from a certificate, find the binding test and its EBITDA cushion, and say whether a given downside breaches.
Read · Guide · 11 min
Credit and Covenant Modelling: What a Lender Actually Tests
Read · Guide · 12 min
Project Finance Modelling: Cash Flow Waterfalls, DSCR Sizing and the Debt Sculpt
Vocabulary: DSCR (Debt Service Coverage Ratio), Term Loan (TLA / TLB), Covenant.