Monitor portfolio · PCT-074 · Sourced card
Triage a waiver request
Reads a sponsor’s amendment or waiver request, maps each ask to its clause and consent class, and projects the covenant with and without it.
Worked example: The borrower isn’t near a breach (5.70x vs 7.00x as-is). The asks lift add-backs from 41% to 58% of reported EBITDA, and the payer add-back has no cap and no end date. This buys headroom ahead of weaker quarters for a 0.25% fee. See the walk-through ↓
Today vs automated
- Read the requestAnalyst · manual
- Find the consent clauseAnalyst · manual
- Re-run the covenant modelPM · manual
- Email / meeting hand-offAnalyst → PM
- A sponsor’s amendment request arrivesTrigger: starts on its own
- List each askAutomated · Document store
- Map consent classAutomated · LLM
- Show ratio with and withoutAI draft, human review · Monitoring model
- Whether to consent, on what terms, and what to ask for in returnApprove / override · PM
AutomatedAI draft, human reviewHuman onlyTools: Inbox / portal, Document store, LLM, Monitoring model, Loan system
Estimated valueestimate
22–330 analyst hours a year
$3k–$82k of time, vs an assumed $10k–$40k tool cost
Net: −$37k to $72k a year net of tool cost; at the low end of the assumptions it does not cover the tool cost.
Assumptions
- 3–6 analyst hours per request today; 0.5–1.5 hours with an agent, including review
- 15–60 requests a year for one team
- $150–250 per hour loaded cost
- Tool or build cost $10,000–40,000 a year (in-house)
Estimate, based on the assumptions shown; your numbers will differ. How we estimate
What else it can do for the team
- Pull prior amendments on the facility
- Draft questions for the lender call
- Draft the PM summary
- Log the request as a soft credit event
- Prepare the consent fee and terms comparison
Worked walk-throughKey catch: The borrower isn’t near a breach (5.70x vs 7.00x as-is). The asks lift add-backs from 41% to 58% of reported EBITDA, and the payer add-back has no cap and no end date. This buys headroom ahead of weaker quarters for a 0.25% fee.
1. The input
SAMPLE: fictional company, illustrative figures. Not a real borrower, deal or lender group.
A sponsor’s amendment request on Project Meridian, read with the facility’s amendments clause and the Q2 monitoring row. SAMPLE pack →
“…the Sponsor requests that the Lenders agree to (i) increase the cap on run-rate cost savings from 20% to 30% for fiscal years 2026 and 2027; (ii) permit an uncapped add-back for losses related to the transition of a regional payer contract, estimated at $2.5m; and (iii) extend delivery of Q3 2026 financial statements by 30 days. In consideration, the Borrower will pay an amendment fee of 0.25%…”
Sponsor letter to the lender group, October 2026 (SAMPLE).
2. What the AI produces
| Ask | What it changes | Consent needed |
|---|---|---|
| (i) Cost-savings cap 20% to 30% | Change to Consolidated EBITDA definition | Required Lenders (>50%) |
| (ii) Uncapped payer-transition add-back | New add-back | Required Lenders (>50%) |
| (iii) Q3 reporting +30 days | Reporting covenant | Required Lenders (>50%) |
| Fee 0.25% | Consideration | n/a |
| Projected Q3 2026 (LTM, $m, SAMPLE) | As-is | With asks |
|---|---|---|
| Reported EBITDA | 30.5 | 30.5 |
| Cost savings counted | 6.1 | 8.5 |
| Payer-transition add-back | 0.0 | 2.5 |
| Consolidated EBITDA | 43.1 | 48.0 |
| Total Net Leverage (covenant 7.00x) | 5.70x | 5.12x |
| Add-backs as % of reported EBITDA | 41% | 58% |
Draft questions for the sponsor: What drives the reported EBITDA decline to 30.5? Which cost-savings actions have been taken, and when? Why is Q3 reporting late? Is the payer contract renewed or lost? What does the sponsor’s own forecast show for Q4 against the 7.00x level?
3. What a person still checks
- Confirm the consent class in the actual agreement and any prior amendments; a tranche or affected-lender right can change who decides.
- Judge the asks in context: the borrower is not in breach on these projections, so the request reads as buying headroom ahead of weaker quarters.
- Decide the price of consent (fee, pricing, tighter reporting, equity support) with the lender group.
4. Where it breaks
- Projected numbers come from the sponsor; the agent can only recompute what it is given.
- Email side discussions and lender-group dynamics don’t show up in documents.
- A mechanical consent map can miss a provision that makes an ask an all-lender matter.
How you get thereFour steps from prompting to an agentic workflow; most teams start at step 1.
Needs: an approved AI tool, a confidentiality policy.
Risk: unchecked answers, data pasted outside policy.
Typical starting point
Needs: field definitions, a template, document parsing.
Risk: breaks silently when formats change.
Needs: inbox/doc-store access, system write-back, logging.
Risk: acting on a misread; needs review gates.
The automated lane above
Needs: shared data model, permissions, audit trail, exception queue.
Risk: errors compound across steps; needs monitoring.
Solution optionsBuy (10 vendors listed), build or hybrid, with the trade-offs of each.
Moody's, Orion (Private Credit AI), Lumonic, Finley, Intain, Versana, CovenantIQ, Alkymi, Henon, Hypercore
Fastest start; you adapt to the product's data model and pricing.
An LLM API, a document parser, a vector or document store, your data warehouse, and a review queue.
Fits your definitions exactly; you own maintenance and controls.
Vendor extraction feeding your own checks, templates and systems.
Common middle path; two things to integrate and govern.
Listing is not endorsement.
What changes for the team3–6 h → 0.5–1.5 h per request (estimate); coverage goes from a sample of borrowers, quarterly to every borrower, every delivery.
How it works
Full title: Amendment or waiver request in: what is being asked, who has to consent, and what it does to the covenant
“The sponsor isn't in breach. Ask why it wants headroom now.”
Scenario
A sponsor emails the lender group asking for a covenant definition change, a reporting extension and an amendment fee. The deal team needs a first read before the lender call.
What the human still decides
Whether to consent, on what terms, and what to ask for in return. That is a negotiation and a credit decision.
Why it matters
Covenant relief requests in the middle market kept rising through 2026, and Moody's now treats waivers as an early stress signal in its private credit model.
What the record shows
Checked 2026-10-18.
Morningstar DBRS (22 Sep 2026) reports 15% of its actively rated private middle-market borrowers seeking covenant waivers or receiving capital support, up from 10% a year earlier; the Moody's Analytics and Allvue EDF-X Private Credit Model (Oct 2026) estimates soft credit events such as covenant waivers separately from missed payments.
Try it: prompt and data
Read this amendment request and the facility's amendments clause. Table each ask, the consent class it needs, and the clause. Recompute the projected covenant ratio with and without the asks using the figures provided. List prior amendments. Draft five questions for the sponsor. Do not recommend whether to consent.
Data
Walk-through uses a SAMPLE deal pack: fictional company, illustrative figures. In practice the inputs are your own confidential borrower or fund documents; keep them inside an approved environment.
Who uses it, vendors and build
- Segments
- Direct lending, Special sits / distressed
- Who uses it
- Portfolio manager, Credit analyst, Fund counsel
- Build
- Buildable in-house
- In-house
- A Quick win on one request; pair with the amendment tracker for history.
- Last verified
- 2026-10-15
Vendors that claim this capability
- Moody's: EDF-X Private Credit Model: soft credit events such as covenant waivers
- Hypercore: covenant-tests, amendment-tracking
- Versana: amendment-tracking
- Alkymi: covenant-tests
- CovenantIQ: covenant-tests
- 5 more vendors claim related capabilities. See all vendors for this stage →
Tags reflect each vendor's own public claims at the linked page (checked 2026-10-15). Not tested, ranked or endorsed.
Sources and related
- Morningstar DBRS: number of middle-market borrowers seeking covenant relief still increasing
- Moody's Analytics and Allvue: EDF-X Private Credit Model flags soft stress such as covenant waivers and PIK (1 Oct 2026)
- Deal packs used in the walk-throughs (SAMPLE, fictional companies)
Related cards
- PCT-013 Soft credit events, read overnight: every amendment, waiver, PIK toggle and extension in your book
- PCT-076 Early-warning brief across the book: financials, reporting behaviour, requests and news in one cited watchlist draft
- PCT-071 Every borrower's quarterly pack, spread into one monitoring model: covenant headroom tracked quarter by quarter
Next step
Related use cases
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Not investment advice. Names marked SAMPLE are fictional. Found an error? See the corrections log.