Reporting the probability of breaching covenants
The combination of cash flow and rolling valuation forecasts, with the detailed debt modelling and economic projections makes ProMS uniquely powerful in its ability to project covenants.
By simulating all the assets in a fund or portfolio along with the associated debt structures, ProMS can model the expected debt and equity levels of the portfolio over time.
The rolling valuations and rents are adjusted in each scenario to reflect the economic movement. For floating rate debt, ProMS also includes the volatility of LIBOR in the projections.
All key ratios are projected, together with the likelihood of that ratio going over or under a trigger point. This enables finance managers to calculate the probability of the portfolio being in breach of loan to value, DSCR or other borrowing covenants.