This module creates the framework for course participants to learn about covenants by providing the context behind each deal – the parties, their motivations, and deal timeline and process. It also walks students through a brief history foreach covenant so students are aware of how they used to work and can compare this to how they work now.

This module walks students through the first step in any covenant analysis –analysis of the day one position in the capital structure and the nature of the credit support. It also explains what “the box” is, how to determine whether the collateral is hard or soft, and highlights the importance of understanding what else the company owns that is not collateral, as this may in the future be offered to new lenders, effectively priming existing lenders.

The Debt & Liens covenant module teaches students how to layer their analysis of potential future debt and liens incurrence capacity onto the capital structure and credit support knowledge so they can assess the impact of these provisions on their “day one” assessment of the borrower’s capital structure and lenders’ collateral and guarantee package.

The module on Calculation Mechanics follows Debt & Liens so students have some context for their understanding of the process for calculating capacity under the covenants. It takes students step-by-step through the covenant calculation process and goes into detail on the inner workings of the Financial Calculations covenant, the newest addition to the leveraged finance covenant package.

The Restricted Payments and Asset Sales covenants are taught together due to the emergence of significant interplay between these provisions over the past decade. Each covenant is broken down into its constituent parts, guiding students through their analysis of potential value loss due to dividends, investments in Unrestricted Subsidiaries, and asset sales, among other corporate actions.

This module covers pricing provisions and transfer provisions in leveraged loans, redemption mechanics in high yield bonds, net short lender provisions, the Affiliate Transactions covenant and the Change of Control covenant, including the portability exception.

New provisions emerging over the past few years related to ESG and sustainability are covered in depth, from the basic question of what ESG is and why it is important, to more a more detailed exploration of coupon step-ups in high yield bonds and ESG margin ratchets in leveraged loans. The module also highlights key sustainability regulations that market participants should be aware of.

The course finishes on how lenders receive information, what they can do if the borrower breaches it’s promises under the covenants, which terms can be amended and what consent levels must be achieved to do so.