Sizing DSCR
The minimum ratio of projected contracted cash flow to debt service used to set how much can be borrowed against a contract.
How it works
The sizing DSCR is the minimum coverage ratio used at signing to work out how much can be borrowed. The lender projects the contracted cash flow, divides it by the sizing ratio, and the debt that can be serviced from the result is the maximum loan.
In GPU and data centre deals
In GPU finance, sizing ratios vary with the customer. Cash flow from investment-grade customers is often sized at a lower ratio, allowing more debt, than cash flow from smaller AI companies. Sizing DSCR is separate from the ongoing DSCR tests in the loan, which may be set at lower levels.
What gets negotiated
- The ratio for each class of customer
- Which cash flows are included and for how long
- Whether the sizing is repeated at each draw
- Interaction with loan to cost or depreciated value caps
In the filed deals
1.30x in Nscale's Ward County and North Carolina facilities; 1.20x in its European facility.
For in-house counsel
Sizing DSCR in the filed documents
Where the term turns up in filed contracts and what is market, for the lender’s or the borrower’s side. Previews are open; the full text is free with InfraCompute Weekly.
- What’s market: Sizing DSCR in GPU loansWhat projected coverage do lenders size a GPU loan to?
- Clause library: Loan sizing: advance rate and sizing DSCREach draw is the lower of a percentage of cost and the amount the contract cash flows can support at a sizing DSCR. The filed…
- What’s market: Advance rate in GPU loansWhat percentage of GPU cost will lenders advance?
- The legal desk for in-house counselContract library, issues lists, checklists and English law notes.
Related terms
Explanatory definition, not a statement that a particular transaction contains this term or a substitute for its contractual definition.
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