Explore Crisil, a company of S&P GlobalFormerly known as Global Research & Risk Solutions
March 27, 2026
Case study
Case study
Covenant monitoring for existing loan agreements
March 27, 2026
Case study
Case study
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Objective
- A US-based private credit fund sought to improve portfolio monitoring efficiency for an existing fund by tracking changes in credit metrics across some 100 active deals
- We developed and implemented a GenAI agent using a large language model (LLM) for a covenant monitoring solution that reviews credit agreements, structures covenants, and delivers monitoring insights benchmarked to current credit metrics
Our solution
- Mapped the existing covenant monitoring process with the deal team, reviewing spreadsheets and loan documents to identify the key data points and reporting needs
- Trained an LLM on the fund’s historical loan agreements, using tagged examples of financial covenants, non financial covenants, waivers and default triggers
- Integrated borrower-level tracking for each deal by extracting and organizing terms into a structured covenant register, listing the metric, threshold, test date, measurement basis and carveouts
- Validated new financial information from compliance certificates and benchmarked them against the agreed covenants, highlighting headroom, potential breaches and items requiring follow up for new financial information
- Delivered structured excel-based reports and a portfolio level dashboard, giving deal teams a single, actionable view of covenant status, and priority alerts, aligned to internal CIO reporting needs
Client impact
- 60% time saving - Reduced covenant capture time from days per deal to under a few hours, including human review and sign‑off, while keeping deal teams firmly in control of the output
- 250+ documents processed quarterly - Improved coverage and consistency across 100 deals, enabling faster response time
- 90%+ data accuracy - Consistently refining and retraining model helped achieve a high accuracy rate with fewer missed or misinterpreted covenants
- 5% exception identified - Enabled proactive portfolio management; initiated earlier engagement with borrowers based on exception reports
- Compliance adherence - Maintained full audit trail of all LLM outputs, edits and approvals to manage regulatory/compliance reporting needs
