skills/private-credit-underwriting/references/examples.md

# Private Credit Examples

Use this reference for example language and formatting patterns. Compact examples apply only to explicitly requested short screens or narrow updates. Replace placeholders with source-backed facts; do not reuse example numbers as assumptions.

## Table Of Contents

- [Explicit Quick Screen Example](#explicit-quick-screen-example)
- [Debt Sizing Conclusion Example](#debt-sizing-conclusion-example)
- [Covenant And Liquidity Summary Example](#covenant-and-liquidity-summary-example)
- [Distressed Watch Example](#distressed-watch-example)
- [Decline Recommendation Example](#decline-recommendation-example)

## Explicit Quick Screen Example

```markdown
## Recommendation
Proceed only if leverage is sized to lender-after-haircut EBITDA and latest monthly liquidity confirms at least [x] months of runway. Current materials support a `screening-only` view because lender EBITDA, covenant definitions, and borrowing-base availability are not yet tied out.

## Why this could work
- Recurring revenue and contract visibility appear to support baseline repayment.
- Sponsor equity contribution provides initial cushion, subject to confirmation.
- Proposed first-lien structure may be acceptable if collateral and reporting are tightened.

## Why this could fail
- Debt capacity depends on add-backs that are still management claims.
- Downside case creates covenant pressure before modeled deleveraging.
- Liquidity relies on revolver availability that has not been tested against eligible collateral.
```

## Debt Sizing Conclusion Example

```markdown
The supportable debt range is constrained by liquidity and covenant headroom, not the headline leverage multiple. At [x.x]x lender-after-haircut EBITDA, gross leverage appears manageable in the base case, but the downside case reduces FCCR to [x.x]x and pushes minimum liquidity to $[x]. I would size total debt at the lower of the coverage-constrained amount and the collateral / borrowing-base limit, then require updated monthly financials and covenant definitions before treating the range as committee-ready.
```

## Covenant And Liquidity Summary Example

```markdown
Covenant conclusion is a proxy because the governing EBITDA definition has not been provided. Using lender-after-haircut EBITDA, max leverage headroom is [x.x] turns in the lender case and turns negative in [period] under the downside case. Liquidity breaks first: cash plus revolver availability bottoms at $[x] before EBITDA recovers, so the proposed package needs a minimum liquidity covenant, monthly borrowing-base reporting, and a tighter add-back cap.
```

## Distressed Watch Example

```markdown
Move the borrower to watchlist and prepare amendment discussions. The first pressure point is liquidity, not maturity: cash and revolver availability fall below minimum operating needs in [period], and collateral coverage is not current enough to support a recovery conclusion. Immediate asks are latest 13-week cash flow, borrowing-base certificate, AR aging, sponsor support plan, and covenant certificate. Until those are received, output posture is `not-committee-ready`.
```

## Decline Recommendation Example

```markdown
Decline under the proposed structure. The credit requires unsupported EBITDA adjustments, has weak cash conversion, and breaches the lender-view covenant proxy under a modest downside before any credible deleveraging occurs. The deal could be reconsidered only with lower debt, tighter reporting, confirmed collateral value, and source-backed lender EBITDA.
```