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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Cash flow available for debt service (CFADS)

What is CFADS, and why do project lenders size debt on it?

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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Cash flow available for debt service is the cash a project or asset generates in a period after operating costs, tax, maintenance capital spending and working-capital movements, before any interest or principal is paid. In project and infrastructure finance it is where the credit starts: debt service cover is CFADS divided by scheduled debt service, and the loan is often sized so that forecast CFADS covers each payment by a target ratio. Its definition is set in the facility agreement, and lenders read what is left out, such as reserve-account movements or one-off income, as closely as what is in.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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