A selected builder-basket right is economically option-like.
The teaching tool applies selected CNI, drafting, prior-usage and gate assumptions to a restricted-payments route. It does not parse an agreement, determine contract-specific availability or produce a market price.
Case presets
CNI path
Drafting
Valuation bridge
Stochastic CNI layer
Selected-route capacity estimate
Builder teaching estimate
Under the selected assumptions, the modeled route produces a €100m capacity estimate, equal to 1.0x closing EBITDA. The deterministic teaching bridge is 63 bps. The stochastic CNI layer estimates the isolated builder leg at €23m, or 16 bps on the same teaching basis. These are not legal conclusions or market prices.
Stochastic CNI option layer10,000 seeded paths
Teaching estimate using the selected hold period, risk-free discount rate and explicit 100% survival; it is not a credit-curve RiskyPV01 and does not upgrade the payoff evidence
Selected-route stackSponsor-friendly
Builder pathzero floor no floor
gross cumulative builder component, before prior usage
Illustrative exit stack by source
modeled selected-route amount through the hold; actual availability depends on the agreement
Illustrative teaching model — full methodology here. The CNI component builds by the selected share of positive CNI and gives losses 100% negative credit. The selected-route amount is the modeled gross builder less prior RPs, floored at zero. The headline bps bridge is a teaching shortcut: effective extraction multiplied by the quoted-spread input, divided by debt face. The stochastic layer runs 10,000 seeded CNI paths around a user-selected centerline. Every output is a teaching estimate, not a market price, legal-capacity conclusion, trading mark or recommendation.
Go deeper. Request controlled access to the complete Covenants Bible or read the public nine-part LevFin Book condensed edition.
The full framework — why a builder basket is a path-dependent call, an equity cure a knock-in, and a make-whole an American call with a stepping strike — is Part VII of the LevFin Book. See also the tool methodology page for the formula, variables and worked example.