Imported from arjundrath-star/klade-analyst (agent-template/skills/credit-analysis/SKILL.md). Install upstream with npx skills add arjundrath-star/klade-analyst --skill credit-analysis. Copyright stays with the author.

credit-analysis

Build a full corporate credit analysis from scratch. This is the foundational deliverable for any credit-oriented coverage — whether you're evaluating a new bond issue, assessing acquisition financing capacity, or stress-testing an existing credit position. A proper credit analysis answers one question: can this company reliably service and refinance its debt?

Trigger

• "Credit analysis for [TICKER]"
• "Creditworthiness of [COMPANY]"
• "Leverage profile for [TICKER]"
• "Can they service their debt?"
• "Credit rating outlook for [COMPANY]"
• "Debt capacity analysis"

Inputs

• Company: ticker or name (required)
• Depth: summary / detailed (default: detailed)
• Comparison: optional rating category medians for benchmarking
• Time horizon: default 3 years forward

Dependencies

• financial-data-api — data source stack (see ../financial-data-api/SKILL.md)
• sec-edgar-fetch — SEC EDGAR integration (see ../sec-edgar-fetch/SKILL.md)

⚠️ DATA SOURCING MANDATE (NON-NEGOTIABLE)

This hierarchy is MANDATORY. Violations = automatic grade downgrade.

1. SEC EDGAR XBRL (PRIMARY for all reported financials):

   • web_fetch("https://data.sec.gov/api/xbrl/companyfacts/CIK{CIK_PADDED_10}.json") with header User-Agent: Klade AI arjun@kladeai.com
   • Extract EXACT values: total debt (short-term + long-term), interest expense, EBITDA components, capex, cash, FCF, operating income
   • Pull debt maturity schedule from 10-K Note disclosures
   • If EDGAR has the number, you MUST use it.

2. Massive.com API (PRIMARY for market prices):

   • web_fetch("https://api.massive.com/v2/aggs/ticker/{TICKER}/prev?apiKey=${MASSIVE_API_KEY}") for exact stock price / market cap

3. FRED API (PRIMARY for macro/rates):

   • web_fetch("https://api.stlouisfed.org/fred/series/observations?series_id={ID}&api_key=${FRED_API_KEY}&file_type=json&limit=1&sort_order=desc")
   • Essential: DGS10 (risk-free), DFF (fed funds), BAMLH0A0HYM2 (HY OAS), BAMLC0A0CM (IG OAS)

4. web_search (SUPPLEMENTARY ONLY):

   • Use for: credit ratings, rating agency outlooks, recent credit events, analyst commentary
   • NEVER use for data that exists in EDGAR or FRED

Methodology

Step 0: EDGAR Data Pull (MANDATORY)

Before any web_search, run the EDGAR XBRL extraction for the target company:

python3 skills/sec-edgar-fetch/scripts/edgar_xbrl_extract.py TICKER --preset credit

Use the extracted summary and data fields as PRIMARY source for all financial metrics. Only use web_search for data NOT available in XBRL (analyst estimates, market sentiment, forward guidance, CDS spreads). Cite all EDGAR-sourced numbers as "Source: SEC EDGAR XBRL".

Step 1: Pull Financial Data from EDGAR

Fetch the company's XBRL data and extract 3-5 years of:

• Revenue, EBITDA, EBIT, Net Income (build EBITDA from operating income + D&A if not directly reported)
• Interest expense (cash interest preferred; if only total interest is available, note)
• Capital expenditures (from cash flow statement)
• Free cash flow (CFO - CapEx)
• Total debt = short-term borrowings + current portion of LT debt + long-term debt + finance lease obligations
• Cash & equivalents + short-term investments
• Stockholders' equity

Step 2: Calculate Leverage Ratios

Show 3-5 year trend. Improving or deteriorating leverage tells the story.

Step 3: Calculate Coverage Ratios

Step 4: FCF Adequacy

• FCF/Total Debt: Can the company pay down debt from operations? >15% is healthy.
• FCF/Interest: Cash flow cushion over interest burden. >3x is comfortable.
• FCF vs. Near-Term Maturities: Compare annual FCF generation to debt maturing in next 1-3 years.
• FCF after dividends: If the company pays dividends, show FCF after dividends — this is the real debt repayment capacity.

Step 5: Maturity Profile

Search EDGAR 10-K for the debt maturity footnote (usually Note 8-12, "Long-Term Debt" or "Borrowings"):

web_search("[COMPANY] 10-K debt maturities long-term debt footnote")

Build a maturity wall table:

Refinancing risk assessment:

• What's maturing in the next 2 years vs. available liquidity?
• What's the current yield environment vs. existing coupons? (use FRED IG/HY OAS)
• Does the company have a revolver? What's drawn vs. available?

Step 6: Credit Ratings & Outlook

web_search("[COMPANY] credit rating Moody's S&P Fitch 2025 2026")
web_search("[COMPANY] credit rating outlook watch downgrade upgrade")

Document:

• Current ratings from all three agencies
• Outlook (stable/positive/negative/watch)
• Last rating action (date + direction)
• Key rating sensitivities (what would trigger upgrade/downgrade)

Step 7: Covenant Compliance

From 10-K/credit agreement:

• Financial maintenance covenants (leverage ratio, coverage ratio, minimum liquidity)
• Current compliance status and headroom
• Incurrence covenants (limitations on additional debt, restricted payments)

Step 8: Benchmarking

Compare the company's metrics to:

• Rating category medians (e.g., BBB median Debt/EBITDA is ~2.5x)
• Direct industry peers (2-3 comparable companies)
• Historical own metrics (is the trend improving or deteriorating?)

Step 9: Forward Projection

Using management guidance + analyst consensus:

• Project EBITDA and FCF for next 2-3 years
• Model the impact of upcoming maturities on interest expense
• Show expected leverage trajectory (deleveraging? re-leveraging?)

Output Format

🏦 Credit Analysis — [Company] ([TICKER])
Prepared: [Date] | Data as of [Date] | All figures in $M unless noted
Sources: SEC EDGAR (CIK XXXXXXXXXX), FRED, Massive.com, Rating Agencies

━━━ EXECUTIVE SUMMARY ━━━
[2-3 sentence credit thesis: is this company investment-grade quality? What's the trajectory?]

━━━ LEVERAGE METRICS (3-YEAR TREND) ━━━
| Metric              | FY20XX | FY20XX | FY20XX (LTM) | Rating Cat. Median |
|---------------------|--------|--------|--------------|-------------------|
| Gross Debt/EBITDA   | X.Xx   | X.Xx   | X.Xx         | X.Xx              |
| Net Debt/EBITDA     | X.Xx   | X.Xx   | X.Xx         | X.Xx              |
| Debt/Equity         | X.Xx   | X.Xx   | X.Xx         | —                 |
| Debt/Capitalization | XX.X%  | XX.X%  | XX.X%        | —                 |

━━━ COVERAGE METRICS ━━━
| Metric              | FY20XX | FY20XX | FY20XX (LTM) | Threshold |
|---------------------|--------|--------|--------------|-----------|
| EBITDA/Interest     | X.Xx   | X.Xx   | X.Xx         | >3.0x     |
| (EBITDA-CX)/Int     | X.Xx   | X.Xx   | X.Xx         | >2.0x     |
| Fixed Charge Cov.   | X.Xx   | X.Xx   | X.Xx         | >1.5x     |
| FCF/Debt            | XX.X%  | XX.X%  | XX.X%        | >15%      |

━━━ CREDIT RATINGS ━━━
| Agency   | Rating | Outlook  | Last Action | Date       |
|----------|--------|----------|-------------|------------|
| Moody's  | Xxx    | Stable   | Affirmed    | YYYY-MM-DD |
| S&P      | XX+    | Positive | Upgraded    | YYYY-MM-DD |
| Fitch    | XX+    | Stable   | Affirmed    | YYYY-MM-DD |

Rating sensitivities: [what triggers upgrade/downgrade]

━━━ LIQUIDITY POSITION ━━━
Cash & equivalents: $X,XXXM
Revolver capacity: $X,XXXM (drawn: $XXXM, available: $X,XXXM)
Total liquidity: $X,XXXM
Near-term maturities (12 mo): $X,XXXM
Liquidity coverage: X.Xx (liquidity / near-term maturities)

━━━ MATURITY WALL ━━━
| Year   | Maturing ($M) | Cumulative | % of Total | Refi Rate Est. |
|--------|---------------|------------|------------|----------------|
| 2026   | X,XXX         | X,XXX      | XX.X%      | ~X.XX%         |
| 2027   | X,XXX         | X,XXX      | XX.X%      | ~X.XX%         |
| 2028   | X,XXX         | X,XXX      | XX.X%      | ~X.XX%         |
| 2029+  | X,XXX         | X,XXX      | XX.X%      | —              |
| Total  | XX,XXX        |            | 100%       |                |

Weighted avg. coupon: X.XX% | Current market yield (IG/HY): X.XX%
Refinancing spread impact: +/- $XXXM annual interest

━━━ COVENANT COMPLIANCE ━━━
| Covenant              | Requirement | Current | Headroom |
|-----------------------|-------------|---------|----------|
| Max Leverage          | <X.Xx       | X.Xx    | X.Xx     |
| Min Coverage          | >X.Xx       | X.Xx    | X.Xx     |
| Min Liquidity         | >$XXXM      | $X,XXXM | $XXXM   |

━━━ FORWARD OUTLOOK (2-3 YEAR) ━━━
| Metric          | Current | Year 1E | Year 2E | Year 3E |
|-----------------|---------|---------|---------|---------|
| EBITDA          | $X,XXXM | $X,XXXM | $X,XXXM | $X,XXXM |
| Net Debt/EBITDA | X.Xx    | X.Xx    | X.Xx    | X.Xx    |
| FCF             | $X,XXXM | $X,XXXM | $X,XXXM | $X,XXXM |

━━━ TRIPLE-THREAT LENS ━━━
🏦 Banker: [Debt capacity assessment — how much more can they borrow? What structures work? Acquisition financing capacity? Dividend recap feasibility?]
📊 Accountant: [EBITDA quality — are add-backs aggressive? Is cash interest different from accrued? Are operating leases properly captured? Working capital trends affecting FCF?]
💰 Wealth Manager: [For bond investors: yield vs risk, recovery assumptions, relative value vs peers. For equity investors: leverage impact on equity returns, financial flexibility for growth.]

━━━ SOURCES ━━━
[List every data source with filing reference, API endpoint, or URL]

Quality Gates

• All financial data from EDGAR XBRL (not web search estimates)
• 3-5 year trend shown for all key metrics
• All three rating agencies checked with dates
• Maturity schedule from 10-K footnotes (not approximated)
• Covenant terms from credit agreement / 10-K
• EBITDA adjusted for non-recurring items (adjustments documented)
• FCF uses cash interest, not accrued interest where possible
• Liquidity includes revolver availability (net of draws and LC commitments)
• Current market rates from FRED for refinancing context
• Forward projection includes upcoming maturity impact on interest expense
• Triple-threat lens references specific numbers from the analysis
• Every number has a source citation

Professional Standards

What separates A from B:

• A-grade: Maturity schedule from actual 10-K footnote, not approximated. EBITDA adjustments verified against company's own adjusted EBITDA reconciliation. Refinancing analysis uses current market spreads (FRED OAS). Covenant headroom quantified precisely. Forward deleveraging path modeled with explicit assumptions.
• B-grade: Leverage ratios correct but no trend. Maturity "approximately" stated. No covenant analysis. No forward projection. No benchmarking to rating category medians.

Common pitfalls:

• Using total interest expense when some is non-cash (PIK, OID amortization)
• Forgetting to include operating lease liabilities in leverage (post-ASC 842)
• Ignoring revolver maturity (if the revolver matures before major term loan, liquidity evaporates)
• Not adjusting for seasonal cash — Q4 cash position may not represent average liquidity
• Treating EBITDA as cash flow — capex, working capital, and taxes eat into actual debt service capacity

See Also

• debt-maturity-profile — deeper maturity analysis
• covenant-analysis — full covenant extraction
• credit-market-pulse — market conditions context
• distressed-screening — if metrics indicate stress
• bond-relative-value — relative value assessment