Refinancing Risk
Short definition
Refinancing risk is the chance that maturing debt cannot be rolled at then-prevailing rates, limits, covenants and market conditions — or only on punitive terms. The maturity wall is this risk put on a calendar.
Detailed explanation
Risk arrives through three channels: price (spread and the reference rate), quantity (limit cuts), structure (shorter tenor, tighter covenants, cash collateral). Split firm-specific (leverage, DSCR) from systemic (a credit freeze).
A committed backstop reduces risk; an uncommitted “relationship bank will roll” is not a stress assumption. A bridge does not defer risk; it concentrates it.
Why it matters for the CFO
Bullets and stacked maturities make a profitable firm a hostage to whether the market is open. The CFO reports refinancing risk as a stress separate from the interest budget.
How to read it
Principal due in 12 months / CFADS or / headroom shows how high the wall is. There is no universal threshold; bank appetite and rating outlook set it. As covenant headroom tightens, refinancing risk rises — they break together.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.