Covenant Stress Test
Recalculate covenant metrics across EBITDA stress scenarios and identify which covenant reaches its entered threshold first. Status reflects only the mathematical assumptions entered — no dramatic language.
Display formatting only. No currency conversion. Enter all figures in the same currency.
Section A — Financial position
Enter your figures. All fields are optional except where a ratio needs them.
Used for DSCR / indicative CFADS only.
Some covenant definitions prevent net debt falling below zero. Use only if it reflects the definition you are modelling.
Covenant EBITDA
Use Reported EBITDA as-is, or build an adjusted / covenant EBITDA bridge.
Covenant thresholds
Enable only the tests you are modelling. Thresholds are your assumptions — not market standards.
Covenant stress test
Recalculates covenant metrics under EBITDA stress. Status reflects only the mathematical assumptions entered.
Secondary to EBITDA stress. Only the debt you mark is affected.
| Scenario | EBITDA |
|---|---|
| Base | £0 |
| -5% | £0 |
| -10% | £0 |
| -15% | £0 |
| -20% | £0 |
| -25% | £0 |
| -30% | £0 |
Enable at least one covenant threshold to populate the stress table.
How stress scenarios work
- Each scenario scales covenant EBITDA by the shown percentage, keeping debt and cash inputs unchanged.
- Status is Pass, Tight (within 10% of threshold), or Breach based only on the thresholds you entered.
- The first scenario where any covenant reaches its threshold is highlighted.
- Interest-rate stress is secondary: it applies only to the debt you mark as subject to rate stress, and only when enabled.
Why covenant stress testing matters
Covenant stress testing shows how financial covenant headroom changes when the assumptions underlying a borrower’s current position deteriorate. A business may comply comfortably at the base case but move closer to a leverage or coverage threshold if EBITDA falls or interest costs increase.
Testing a range of downside scenarios helps show how much resilience exists before an entered covenant threshold is approached or breached.
Interpreting the stress results
The stress table recalculates the active covenant measures at each selected scenario and highlights when a covenant moves from Pass to Tight or Breach. This can help identify which covenant becomes restrictive first and how quickly headroom reduces as conditions weaken.
The results are scenario outputs based on the assumptions entered. Actual covenant compliance depends on the definitions, adjustments and testing provisions contained in the relevant finance agreement.