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.
Debt service coverage for the subordinate and senior tax allocation bonds, including the new issues, is sound with fiscal 2007 projected revenues covering maximum annual debt service (MADS) 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.
Financial operations are sound, generating solid debt service coverage and adequate operating margins.
The 'A+' rating reflects the sound debt service coverage provided by pledged tax increment revenue, the CCCRA's diversity and importance to wealthy Palm Beach County (rated 'AAA' by Fitch), strong growth, and potential for continued development, along with solid legal provisions.
The 'A' rating on FAU's housing system bonds is supported by the financial viability and adequate debt service coverage generated by the integral and self-supporting housing system, strong student demand, and FAU's credit profile.
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.
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.
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.