How financing decisions ripple through a company's cost of capital, governance, strategic flexibility, and market perception.
Capital structure isn't just a financing exercise—it's a strategic choice with real consequences for how a company operates, how it's valued, and how the market perceives its creditworthiness. The mix of debt and equity a company carries affects everything from its weighted average cost of capital to the governance constraints imposed by its lenders.
This module connects the dots between structure and outcomes. You'll learn how companies optimise their cost of capital through leverage, how covenants function as both constraints and governance tools, and how rating agency decisions create feedback loops that shape financing access and pricing.
How leverage affects a company's weighted average cost of capital. Explore the trade-off between the tax shield of debt and the rising cost of financial distress, optimal capital structure theory, and how practitioners think about target leverage in real transactions.
View LessonCovenants as a governance mechanism, not just a constraint. Understand how negative covenants, restricted payment baskets, and financial maintenance tests shape management behaviour—and how the balance of power between borrowers and lenders has shifted across credit cycles.
View LessonHow Moody's, S&P, and Fitch assess capital structure and why their opinions matter. Cover rating methodologies, the mechanics of upgrades and downgrades, investment-grade vs. high-yield thresholds, and how ratings drive borrowing costs, investor eligibility, and market access.
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