Measuring Liquidity Duration
Hi all, buy-side corporate credit analyst here on a fixed income desk. I'm new, so don't shit too hard. I'm helping my PM measure the liquidity profile of each issuer in our portfolio. Basically, I want to find out how long a company's current liquidity (Cash + Avail. Lines of Credit) will last them through their bond principals.
For example, if Company ABC has (Cash + Avail. Lines of Credit) = $10M, and bond principal is $5M each year, then Liquidity Duration = 2.0 years (10M / 5M). The only problem is companies have varying bond principal each year, so it's a linear equation. I believe a more fluid arithmetic would look like so:
(Cash + Avail. Line of Credit) - Y1, Y2, Y3 . . . Yn = 0 Whereas Y1/2/3 = debt service in year 1/2/3 and so on. How do I solve for 'n' here? Based on Company ABC, n=2.0
Any ideas on how to make this custom formula pull 'n' for Bloomberg API? I think it's less about finding mnemonics and more about building a calculus formula.
The idea is that the larger 'n' is for each issuer, the better liquidity profile they have. Issuers with n > 2-3 years will be able to outlast a downturn with the balance sheet alone and not have to worry as much about earnings power.
Attached is a file with another example: https://drive.google.com/file/d/12wOmjCcDsCEOqFoq…
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