Selected accordion rights are economically option-like.
Size selected debt routes, compare explicit stacking conventions, and separate borrower financing benefit from MFN cost. It does not parse the agreement, determine debt or lien capacity, or produce a market price.
Case presets
Capacity mechanics
Free capacity = greater of fixed and grower, less prior usage. Opening covenant debt = leverage × EBITDA, separate from reference debt face. Use the same gross/net and debt-perimeter definitions as the ceiling; new borrowing proceeds are never netted. Other baskets, repayment credits and legal gates are outside this selected-route calculation.
Priority overlay
The residual is non-payment-subordinated debt with other liens or no security. Payment subordination is classified first. These assumed buckets do not determine debt or lien permission and do not drive MFN eligibility.
Valuation bridge
Discount & reference instrument
Annual interest with a final stub; 100% survival and no amortisation. New-debt tenor starts at the draw date; protected debt maturity is measured from today. These are separate cash-flow schedules.
MFN protection
Selected-route capacity estimate
Net financing-benefit teaching estimate
Adjust the inputs to calculate selected-route capacity and financing-benefit teaching estimates. JavaScript is required; no calculation data leaves your browser.
The selected-route amount is a teaching estimate under chosen mechanics. Actual availability and ranking require the full agreement, liens package and intercreditor analysis.
Right of center is borrower financing benefit; left is the MFN cost to the borrower. All bridge rows use the same discounted reference-debt PV01. The separate four-year shortcut is not added. No default or lender credit loss is modeled; every value remains a teaching estimate.
Illustrative teaching model: full methodology here. Free-and-clear and ratio mechanics produce a selected-route capacity estimate under the inputs chosen. Future EBITDA is a separate sensitivity, not present capacity. The ranking split is assumed, not parsed. Actual incurrence, lien and intercreditor capacity require the full documents. Every euro and bps output is a teaching estimate, not legal advice, a market price, a trading mark or a recommendation.
Go deeper. Request controlled access to the complete Covenants Bible or read the public nine-part LevFin Book condensed edition.
The full framework is Part VII of the LevFin Book: why a builder basket is path-dependent, incremental debt is a leverage-gated call, MFN is lender protection, and a make-whole is an American call with a stepping strike. See also the tool methodology page for the formula, variables and worked example.
What this incremental debt calculator does
An incremental facility — the accordion — is the borrower’s option to add debt under an existing credit agreement without a full amend-and-extend. Lenders write that option in free-and-clear baskets, ratio doors, grower prongs and ranking rules, then take some economics back through MFN protection.
This Incremental Debt Lab is a teaching calculator for those selected mechanics. Choose a case preset, set EBITDA, leverage, the free-and-clear basket, the ratio ceiling and the MFN terms, and the page returns two teaching outputs: a selected-route capacity estimate and a signed spread-equivalent financing-benefit estimate. Neither is a legal conclusion or a market price.
The capacity bridge starts with free-and-clear plus ratio capacity today, then shows any future-EBITDA sensitivity as modeled optionality rather than present capacity. The ranking split is an assumed overlay, not a liens or intercreditor parser. The bps bridge converts the borrower’s assumed financing benefit into spread-equivalent basis points and subtracts its MFN cost. Neither leg measures lender credit loss.
Read the incremental debt methodology for the formula, the discounted RiskyPV01 conversion, the worked example and the limits. The restricted-payments counterpart is the builder basket calculator; call protection is the make-whole calculator.
Common questions
An accordion, or incremental facility, lets a borrower add debt under an existing credit agreement without a full amend-and-extend. This teaching tool sizes selected free-and-clear and ratio routes, then overlays assumed ranking and MFN protection. It does not parse the agreement or determine legal capacity.
No. The headline is a selected-route capacity estimate under the inputs you choose. Debt-incurrence permission, lien permission, payment ranking and structural subordination require separate document analysis. The authority for any contractual-capacity conclusion is the actual credit agreement or indenture.
Most-favored-nation protection gives existing lenders a spread give-back if qualifying incremental debt is issued inside a protected window above a cushion. The tool models cushion, sunset, trigger probability and new-issue premium as a teaching estimate of lender uplift, not a market price.
Financing benefit and MFN cost are divided by the same discounted reference-debt PV01. The four-year shortcut is displayed separately for comparison. Changing the denominator does not upgrade the payoff evidence: every number remains a teaching estimate.
No. The optional future-EBITDA layer is a separate single-date sensitivity, not present debt capacity. Selected-route capacity today is free-and-clear plus current ratio capacity under the chosen inputs.
No. Every euro and bps output is a teaching estimate under stated assumptions. It is not a market price, trading mark, legal conclusion or recommendation.