Course 11 of 20 · Natural Gas Desk Academy

Working Capital and Credit for a Gas Supply Book

Stage C, Spread, storage and cash economics. Level 6 of 10.

The cash and credit layer of the book: margin and collateral calls, letters of credit, borrowing base and inventory financing, and the payment timing cycle that sets peak funding need.

119 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 05, Course 08, Course 10

Enrol or enquire See the 119 chapters
How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 119 chapters

Open any module for its full chapter list, in teaching order.

M0 The Money Layer of a Supply Book Ch 1-9
  1. Why a Profitable Gas Book Can Run Out of Money
  2. Working Capital Defined for a Gas Merchant
  3. The Three Cash Demands: Purchases, Margin and Collateral
  4. Credit Risk and Funding Risk Are Not the Same Thing
  5. Why Gas Funding Is Seasonal, Not Per-Cargo
  6. Who Holds the Money Decisions on a Gas Desk
  7. The Capabilities Taken as Given Here
  8. The Funding Curve: One Picture of the Whole Year
  9. How the Modules Fit and Where Threads Continue
M1 The Gas Cash Cycle and Payment Timing Ch 10-20
  1. Gas Day, Month and the Unit of Cash
  2. The Payment Timing Calendar, Step by Step
  3. Why You Pay Before You Are Paid
  4. Converting a Timing Gap into a Money Number
  5. Transport, Capacity and Demand Charges in the Cycle
  6. Prepaid Items, Imbalance Cash-Out and Timing Noise
  7. Disputed Invoices and the Cash They Hold Hostage
  8. Payment Terms as a Negotiating Variable
  9. Netting Payment Flows with a Single Counterparty
  10. Cash Flow Timing Across Currencies and Regions
  11. A Worked Month of Cash In and Cash Out
M2 Forecasting Peak Funding Need Ch 21-30
  1. The Shape of a Seasonal Funding Requirement
  2. Why the Peak Arrives in a Predictable Month
  3. Building a Twelve-Month Funding Forecast
  4. Price Level Versus Volume in the Forecast
  5. Stressing the Forecast for a Cold Month
  6. Stressing the Forecast for a Price Spike
  7. Headroom: The Gap Between Need and Facility
  8. Daily Liquidity Monitoring and the Early Warning Set
  9. Forecasting Collateral Before It Is Called
  10. Where Funding Forecasts Go Wrong
M3 Assessing a Counterparty Ch 31-41
  1. What You Are Actually Assessing
  2. Reading a Set of Accounts for Trading Purposes
  3. Signals Outside the Accounts
  4. Internal Ratings and Scorecards
  5. Wholesale Counterparties: Traders, Utilities and Producers
  6. Industrial Customers: Assessing a Single Factory
  7. Small Business and Retail Customer Credit
  8. Group Structures, Guarantors and Who Actually Owes You
  9. Monitoring a Counterparty After Onboarding
  10. Deciding to Reduce or Stop Trading a Name
  11. An Assessment Written End to End
M4 Exposure, Limits and Netting Ch 42-52
  1. What Credit Exposure Means on a Gas Book
  2. Settlement Exposure: Gas Delivered and Not Yet Paid
  3. Replacement Exposure on Forward Obligations
  4. Potential Future Exposure and Why It Is Added
  5. Adding the Components into One Exposure Number
  6. Setting a Credit Limit and What It Controls
  7. Limit Breaches, Approvals and Temporary Uplifts
  8. Master Agreements and Why They Change the Number
  9. Close-Out Netting When a Counterparty Fails
  10. Netting Across Products, Entities and Jurisdictions
  11. Exposure Reporting a Credit Committee Will Accept
M5 Credit Support Instruments Ch 53-64
  1. The Purpose of Credit Support
  2. Parent Company Guarantees: What They Do and Do Not Cover
  3. Valuing a Guarantee: The Guarantor's Own Strength
  4. Letters of Credit: The Mechanism
  5. Drawing on a Letter of Credit
  6. Standby Credit, Surety and Bank Guarantees Compared
  7. Cash Deposits and Prepayment from Weaker Buyers
  8. The Cost of Credit Support and Who Bears It
  9. Choosing Between Security Options for One Counterparty
  10. Monitoring Expiry, Renewal and Instrument Decay
  11. Adequate Assurance and Calling for More Security
  12. When Security Fails: A Worked Default
M6 Margin and Collateral on Hedges Ch 65-76
  1. Why a Correct Hedge Demands Cash
  2. Clearing Houses and the Margin Model
  3. Initial Margin: Sizing the Opening Requirement
  4. Variation Margin: The Daily Settlement of Gains and Losses
  5. Margin Calls Through a Rising Market
  6. Eligible Collateral, Haircuts and Substitution
  7. Intraday Calls and the Hours You Have to Pay
  8. Bilateral Collateral Under a Credit Support Annex
  9. Negotiating Collateral Terms to Shape Cash Demand
  10. Cleared Versus Bilateral: A Funding Comparison
  11. Margin on a Hedge That Spans the Storage Year
  12. The Margin Spiral and How Desks Get Caught
M7 Financing Inventory and the Borrowing Base Ch 77-87
  1. Gas in Storage as a Financeable Asset
  2. Title, Custody and Control of Stored Gas
  3. The Borrowing Base: What It Is
  4. Eligibility Rules and Why Assets Get Excluded
  5. Advance Rates and the Equity You Must Fund
  6. Marking Inventory for the Borrowing Base
  7. Hedging as a Condition of Inventory Finance
  8. Repo and Monetisation Structures for Stored Gas
  9. Financing the Injection Season
  10. Repaying Through the Withdrawal Season
  11. Minimum Operating Inventory and Recoverable Pipeline Gas
M8 Receivables and Customer Credit in a Supply Book Ch 88-98
  1. The Receivables Book as an Asset Class
  2. Ageing, Collections and the Cash They Release
  3. Receivables Financing: Factoring and Discounting
  4. Securitisation and Larger Receivables Programmes
  5. Credit Insurance on a Supply Book
  6. Security from Industrial Buyers Who Cannot Give a Guarantee
  7. Deposits, Direct Debit and Billing Frequency
  8. Bad Debt Provisioning and Expected Loss
  9. Customer Concentration and the Single Large Offtaker
  10. Winter Receivables: Why the Book Swells When Cash Is Tightest
  11. Restructuring a Customer Who Cannot Pay
M9 Facilities, Covenants and the Lender Relationship Ch 99-108
  1. The Facilities a Gas Supply Book Needs
  2. Committed Versus Uncommitted: The Difference That Matters in a Crisis
  3. Sizing and Shaping a Facility to the Season
  4. What a Facility Costs: Margin, Fees and Utilisation
  5. Financial Covenants and What They Measure
  6. Covenant Headroom and Forecasting a Breach
  7. Managing a Breach: Waivers, Resets and Consequences
  8. Borrowing Base Certificates and Lender Reporting
  9. Keeping Banks Informed Before You Need Them
  10. Diversifying Funding Sources
M10 A Funding Year, End to End Ch 109-119
  1. The Book We Will Fund: Setting Up the Case
  2. April to June: Opening the Injection Programme
  3. July to September: The Peak Takes Shape
  4. October to December: Receivables Replace Inventory
  5. January to March: Collections, Repayment and the Trough
  6. The Same Year with a Cold Winter
  7. The Same Year with a Counterparty Failure
  8. Reducing Peak Funding Need Without Reducing the Book
  9. The Cost of Credit as a Number in Every Deal
  10. What This Course Cannot Do
  11. The Funding and Credit Review a Desk Should Run Monthly

The brochure gives each of these 119 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 11 of twenty

It stands alone, and it is also the entry point to the Natural Gas Desk Academy pathway.

Enrol or enquire See the whole pathway