02 — Capability · BC-230.20
Funding & Capital Structure
Raise the debt and equity the enterprise needs on terms it can sustain, and keep the mix of the two where the board and the rating agencies want it.
- Capital Markets
- Debt Management
- Corporate Finance
In scope
- Debt issuance and bank facilities
- Covenant monitoring and compliance
- Credit rating and capital structure policy
Out of scope
- Shareholder and analyst communication about the capital structure (see BC-270)
- Deciding on acquisitions (see BC-110)
Decomposes into · 4
- BC-230.20.10Debt Issuance & FacilitiesArrange bonds, term loans and revolving facilities when funding is needed, at the tenor, cost and flexibility the plan calls for.
- BC-230.20.20Covenant MonitoringTrack every financial covenant against actual and forecast results and raise the alarm well before a breach, not after.
- BC-230.20.30Capital Structure PlanningDecide the target balance of debt and equity, the dividend and buyback policy that follows from it, and the rating the enterprise wants to hold.
- BC-230.20.40Guarantees & Credit SupportIssue and track parent guarantees, letters of credit and other credit support, so contingent obligations are known and not discovered.