ICR Covenant
Short definition
An ICR covenant requires EBIT or EBITDA / interest not to fall below a floor. It does not test principal; on amortising and balloon loans it is looser than DSCR.
Detailed explanation
The numerator (EBIT/EBITDA) and denominator (cash/accrued/capitalised interest) are in the pack. A floating-rate shock breaks this test faster than EBITDA.
ICR alone does not see the maturity wall. That is why most packs pair it with leverage or DSCR.
Why it matters for the CFO
In a high-rate regime it is one of the first tests to break. Capitalised interest produces cosmetic green.
How it is calculated
Test: ICR ≥ Asgari düzey (asgari pakete göre değişir)
Variables in the formula
- Min ICR: Contractual ICR floor
How to read it
Floor 2.5x, actual 3.2x → 0.7x headroom. 2.5x is not universal safety.
Numerical example
EBIT 80, interest 25, floor 2.5x → ICR 3.2x, headroom 0.7x.
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Definitions are educational. They are not investment, credit or tax advice.