The debt portfolio as part of a larger whole

A debt portfolio can be regarded as a separate entity. However, for valuation purposes, the portfolio must be seen in a wider context and examined from various angles. One key question is: ”How do the supplier and the client do business?” The process starts from the nominal value of the debt portfolio and ends with the determination of its intrinsic value. The difference between the nominal and intrinsic value is the factor which will be explained.

Debt portfolio and the borrowing base

How the company actually operates in practice, it´s way of doing business, has a direct bearing on the debt portfolio. Financiers are extremely interested in how their clients run their business, particularly in the event of borrowing base financing, a periodic audit, a new loan application, deteriorating financial results and changing market conditions.


Based on certain assumptions, historical data and probability calculations, an estimation is made on how the intrinsic value of a portfolio will develop in various scenarios.


Does the debt portfolio offer the financier sufficient certainty if the company hits on hard times? A stress test is essential when a negative scenario for the company looks increasingly likely. Reflection on the outcomes can produce surprising insights.