Covenant monitoring

Covenant monitoring is the ongoing tracking of a borrower’s financial and reporting covenants after a loan closes. It confirms the borrower is doing what the credit agreement requires, and it surfaces early-warning signals before a soft spot becomes a loss.

What gets monitored

• Financial covenants such as maximum leverage, minimum DSCR or fixed-charge coverage, and minimum liquidity.
• Reporting covenants such as the timely delivery of statements, compliance certificates, and budgets.
• Trends that are not covenants but matter: margin compression, rising leverage, or a shrinking borrowing base.

Why it is hard at portfolio scale

Each credit reports on its own cadence in its own format. Tracking compliance by hand across a book means re-spreading every statement as it arrives and remembering every test date. Things slip, and breaches are caught late.

How vishwa.ai automates covenant monitoring

vishwa.ai ingests periodic reporting automatically, re-spreads it, tests each covenant against the agreement, and flags breaches and metric drift early, with drill-down to the individual credit. The portfolio view is always current, and every figure traces back to the statement it came from.

See also: credit memo, DSCR, financial spreading.