Debt-like items

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

Debt-like items are obligations that are not borrowings but behave like them in a lender's reading: a defined-benefit pension deficit once a recovery plan sets the payments, deferred consideration on an acquisition, overdue tax, customer deposits that must be refunded, provisions about to become cash. Each competes with debt service for the same cash, so a desk adds them to debt, or takes their payments out of the cash available, before it calculates leverage or cover. A ratio that leaves them out describes a business with fewer claims on it than it has.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.