Trials and Tribulations of Calculating Covenant Capacity — Part 1 — Shrinking Numerators

Share

News and Analysis

Trials and Tribulations of Calculating Covenant Capacity — Part 1 — Shrinking Numerators

Alice Holian's avatar
  1. Alice Holian
15 min read

Mini-Series Introduction

As market conditions remain challenging (and scary!), we’ve taken the opportunity to dive headfirst into the trials and tribulations of calculating covenant capacity — certainly not a topic for the faint-hearted. Calculation mechanics and financial definitions are becoming more complex and bespoke. Covenant figures continually move further and further from their accounting or reported counterparts, making it difficult to calculate covenant capacities with any modicum of accuracy. Prior periods of low interest rates and flowing liquidity created ripe conditions for innovations to take root in the market as investors piled into deals and very little pushback was achieved (or perhaps even raised). We doubt that recent market volatility and rising interest rates will be enough to turn the tide on covenant innovations.

Read all our public content for free

We won't spam. You can unsubscribe at any time.

What are you waiting for?

Try it out
  • We're trusted by 9 of the top 10 Investment Banks

Cookies & Privacy

We would like to use cookies to improve our service. Is that ok?