Debt service coverage


Also found in: Acronyms.

Debt service coverage

The ratio of cash flow available to the borrower to the annual interest and principal payments on a loan or other debt.

Debt-Service Coverage Ratio

1. In investment real estate, the ratio of annual net operating income on a piece of investment property to its annual debt service. Banks use the DSCR to help determine whether to make or refinance loans for investment property. A DSCR equal to or greater than 1 indicates that the debtor is able to service the debt on the income from the investment property. In personal finance, banks usually require a DSCR of at least 1 to make such a loan, while they generally expect a ratio of 1.2 for commercial projects.

2. In government finance, the ratio of annual export earnings to its annual debt service on external debt.
References in periodicals archive ?
72 percent, was written for a term of 10 years with a 25-year amortization, and delivers debt service coverage of 1.
Even so, Fitch expects that JEA's future debt service coverage will remain in line with 2006 levels (approximately 2x, given the rising annual debt service).
As a result, actual debt service coverage exceeds the 1.
Under Fitch scenarios which project 4%-6% annual traffic increases, well below the 9% average rate of the past six years, debt service coverage would remain under the rate covenant, and would require an estimated $1.
Fitch's primary credit concerns are Sunnyside's thin debt service coverage with a high reliance on turnover, future capital needs, and difficult labor market.
The 'AA' rating reflects RTA's growing and diverse service area; strong pledged sales tax support with high debt service coverage levels; the essentiality and demand for the transit services supported by pledged revenues; and solid operational and financial performance.
Debt service coverage levels are expected to remain strong given the significant demand on pledged revenues to fund the operating needs of the transit network, which are paid after debt service.
The 'AA-' rating for the new series 2006A sales tax revenue bonds (FasTracks bonds) reflects strong debt service coverage by RTD's sales tax pledge, a flexible capital plan, a high additional bonds test, and RTD's overall strong underlying credit fundamentals.
In addition to strong debt service coverage by sales tax revenues despite declines a few years ago, RTD's other positive credit features include the economic base's sound underpinnings, effective utilization of debt instruments, and a willingness to increase fares.
The ratings are based on rental income derived from military housing allowances, the demand for affordable rental properties for junior military personnel in San Diego, debt service coverage levels generated by the project, and the legal structure with respect to the different classes of bonds.
These revenues provide sound debt service coverage, which along with the system's sizable cash balances evidence sound financial operations.
Credit concerns also include a competitive local gaming environment with four other tribal gaming facilties within 50 miles and reliance upon the successful construction of a hotel and the subsequent boost in gaming activity to achieve an adequate cushion in debt service coverage levels.