To all the Lev Fin monkeys out there, please let me know if you have any good resources on how to get better at reading a Credit Agreement. I'm an A1 and it's definitely been an uphill battle in trying to get this skill down. I've definitely learned a lot by doing over the past few months but feel like there's still a good deal of room for improvement.
I especially want to learn more about the different baskets (incremental, ratio, etc.) and how they come into play. Please let me know if you've come across any helpful guides / primers. Thank you!
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Ask counsel on one of the deals if they have any summary / onboarding materials for their incoming lawyers (guise if as you helping some incoming intern or new hire, if you feel it’s stuff you should know).
Do you have a corporate lending team? If so a junior person there can surely help, or if you have a rapport, spend 30mins going through some stuff.
LCD News may have a leveraged loan / high yield primer.
All else fails, open the CA. Compare to your summary term sheet and even marketing term sheet. Incremental and incurrence items are going to be in the Negative Covenants section. Reporting requirements etc in Affirmative covenant section.
Best of luck. Given you are asking this question means you are ahead of your peers who are staying afloat.
Thank you, this is very helpful!
Echoing that you should read the LCD primers. Read them now. Read them again in 3 months. Your depth of understanding will change drastically as you work on more deals.
Google different parts of the CA / indenture (I.e. restricted payments, incurrence), and read some of the articles written by law firms.
I was a huge fan of Covenant Review my first year on the desk. I would use it to compare the CA / Indenture which helped me build the skill faster.
Last advice, if your team needs to do a covenant review or calculate incurrence/liens/RP capacity, ask your associate to take a first swing. You learn from making mistakes and identifying nuances in the debt docs.
Good luck!
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