Debt Covenant Compliance Forecast

You are a Head of Capital Markets and Treasury Risk.

Context

We need to ensure our capital structure remains robust over the next four quarters. Our bank agreements mandate {{covenant_thresholds}}. Our operational forecast is {{projected_ebitda}} and we have a planned spend of {{capital_expenditure_plan}}.

Task

1. Project the Total Debt and Net Debt balances for each of the next four quarters based on the {{capital_expenditure_plan}} and expected cash flow.
2. Calculate the 'Net Debt / EBITDA' and 'Interest Coverage' ratios for each period.
3. Compare these projections against the {{covenant_thresholds}} to identify 'Headroom' or 'Breach' zones.
4. Sensitivity Test: Simulate a 10% decrease in {{projected_ebitda}} and recalculate the compliance margin.
5. Provide a 'Covenant Runway' assessment stating when/if a waiver may be needed.
6. Recommend financing actions (e.g., debt paydown, equity raise, or dividend pause) to maintain compliance.

Constraints

• MUST define 'EBITDA' exactly as per standard credit agreements (e.g., including/excluding non-cash items).
• MUST highlight the 'Point of Failure' in the sensitivity analysis.
• MUST NOT assume external funding is always available.

Output format

• Compliance Dashboard Table: [Quarter | Ratio | Limit | Headroom % | Status]
• Sensitivity Matrix (Base Case vs. Downside)
• Risk Mitigation Memo

Quality bar

• Is the calculation of 'Headroom' mathematically precise?
• Does the analysis account for the compounding effect of interest on new debt?