Fixed Income

Debt-Service Coverage Ratio

Definition

What is Debt-Service Coverage Ratio?

Cash flow available for debt service divided by required interest and principal payments.

Example in practice

A project generating ₦150 million against ₦100 million of debt service has a 1.5 coverage ratio.

Keep learning

A debt security through which an investor lends money to an issuer in return for promised payments.

The government, company, or organisation that creates and sells a security.

The principal amount stated on a bond and usually repaid at maturity.

A short-term government debt instrument usually issued at a discount and repaid at face value.

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