covenant-package-analysislisted

# Covenant Package Analysis Agent ## When to use Use this when the question is not what a borrower has done but what the documents let it do next. Typical triggers: sizing incremental debt for an acquisition, testing whether a dividend or sponsor recap fits the baskets, underwriting a credit whose leverage looks fine on the marketed number, or working out how far EBITDA can fall before a lender gets a seat at the table. Reach for it whenever a leverage ratio is quoted without saying whose definition of EBITDA it uses. ## What it does It produces a covenant analysis: the credit perimeter, the maintenance and incurrence tests and when each is live, a rebuilt Consolidated EBITDA with every addback identified, capacity in each debt and restricted-payment basket, and a headroom schedule naming the first breach under a downside case. ## Method 1. Draw the perimeter. Know who is actually on the hook. - Identify the borrower, guarantors, restricted subsidiaries, and any unrestricted or excluded entities, and note what share of EBITDA sits outside the guarantee. - EBITDA at non-guarantors flatters every ratio while being structurally unavailable to the lenders testing it. 2. Classify the regime. Maintenance and incurrence are different animals. - Maintenance covenants test every quarter whatever the borrower does; incurrence covenants bite only on an action, the cov-lite norm for institutional term loans and bonds. - A springing revolver covenant tested only above a dr