hard · Private Credit & Debt underwriting-credit-analysis
A borrower is in compliance with its 5.0× leverage covenant but its 'DSCR' is 0.95×.
What does this indicate to a credit analyst?
- The company is highly profitable but over-leveraged
- The company is not generating enough cash flow to meet its current debt obligations
- The company has significant liquidity headroom
- The company is in technical default on its leverage covenant
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