hard · Corporate Credit Analysis covenants
If an issuer has a builder basket with a 50% CNI multiplier, what happens if CNI is negative for the *entire* period since the reference date (e.g., -$100 million)?
- The builder component adds $0 million, but the -$100 million may reduce other building blocks like the starter basket.
- The issuer must contribute a fresh $100 million of new cash equity in order to fully 'reset' the basket to zero.
- The negative CNI is ignored entirely, and the basket simply stays frozen and untouched at the original 'Starter' level.
- The builder component instead adds a negative -$50 million figure directly into the available amount pool, cutting capacity.
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