Debt-service coverage ratio

(redirected from Debt Service Coverage Ratios)

Debt-service coverage ratio

Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate.

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 ?
The company's debt service coverage ratios are supported by positive leasing spreads that have been in the double digits on a percentage basis across the portfolio over the past several years.
Debt service coverage ratios have been consistently solid with interest and fixed charge coverage measuring 2.
While the CRP acquisition adds a large pool of high quality senior housing and medical office assets to HCP's existing, diversified portfolio and increases the company's exposure to private pay sources of revenue, Fitch is very concerned by the significant increase in leverage and related erosion in debt service coverage ratios resulting from the acquisition.
Fitch also notes that HCN has indicated that it intends to maintain debt service coverage ratios and leverage within existing ranges after the closing of the acquisition.
Though the company's leverage will likely increase and its debt service coverage ratios (DSCR) may decrease somewhat, Fitch expects the company to finance the acquisition in a manner that is appropriate for the existing ratings.
NHP maintains solid debt service coverage ratios, a sizable pool of unencumbered assets, well-laddered debt maturities and minimal lease expirations over the next several years.
Recent financial performance has been better than earlier projections, and if sustainable, the longer-term cash flows and debt service coverage ratios may be consistent with a higher rating.
Fitch is troubled by the continued pressure on debt service coverage ratios.
Rating concerns include the currently weak debt service coverage ratios for the rating category.
GP&L has proven to be reasonably responsive to natural gas price volatility, engaging in monthly natural gas hedging practices, which has allowed the utility to set rates 5% below those of TXU (the nearby investor-owned utility), and maintain solid debt service coverage ratios above 1.
Financial performance has generally lagged expectations, and debt service coverage ratios have persistently fallen below 1.
Annual debt service coverage ratios are lower in the long-term than original forecasts.