The Art and Science of Pricing Covenants in a Changing Market

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This chapter delves into the intricacies of pricing covered interest and how market conditions affect covenant flexibility. It highlights the challenges companies face in adjusting their EBITDA calculations amidst the financial impacts of COVID-19 and the difficulties in determining normalized levels during economic uncertainty.

The Covenants by Reorg team speaks to Muzinich & Co’s Senan Kiran about the multiple factors driving covenant pushback, of which the credit story is just one; the use if flexibility in documents: Caveat Emptor - know your documents; and IFRS 16, calculating covenant capacities and campaigning to increase transparency. If you are not a Reorg subscriber, request access here: go.reorg-research.com/Podcast-Trial