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covenant-package-analysis

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Rebuilds covenant EBITDA, maps the debt and restricted-payment baskets, and tests headroom under a downside case, when you need to know what a credit agreement actually permits.

packs/investment-banking/skills/covenant-package-analysis/SKILL.md

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Sep 10, 2026
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# 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.
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