medium · Private Credit underwriting-credit-analysis
An elite credit fund considers a B-rated industrial company. The internal benchmark for 'average risk' interest coverage is 2.0x.
If the company has $60 million of debt at an 8% coupon and $12 million of EBITDA, how is it rated?
- Watch/Elevated Risk, as its ICR is below 1.5x.
- Default/CCC, as EBITDA does not cover the debt.
- Average Risk, as its ICR is exactly 2.0x.
- Minimal Risk, as its ICR is 2.50x.
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