Covenant compliance monitoring

The problem

Your credit fund manages 40 portfolio companies, each with different credit agreements, financial covenants, and compliance reporting requirements. You need to track leverage ratios, interest coverage, fixed charge coverage, and capital expenditure limits — across quarterly reporting periods.

Today, your team maintains a covenant tracking spreadsheet manually. Every quarter, analysts extract covenant definitions from credit agreements, map them to borrower financials, and calculate compliance. The process is error-prone, time-consuming, and doesn't scale.

When a portfolio company approaches a covenant trigger, you find out weeks late — after the cure period has narrowed and your negotiating position has weakened.

The Omega approach

Upload credit agreements and amendments. Omega Intelligence extracts financial covenant definitions, trigger levels, step-downs, cure provisions, and reporting requirements. Build a structured covenant database that updates automatically as agreements are amended.

What you get:

• Covenant extraction: Total leverage ratio, senior leverage, interest coverage, fixed charge coverage, minimum liquidity, and CapEx limits extracted with exact definitions
• Trigger mapping: Covenant levels by testing period, including step-downs and seasonal adjustments
• Cure provisions: Equity cure rights, cure periods, and limitations extracted and tracked
• Cross-default analysis: Identify cross-default provisions and material adverse change clauses
• Reporting calendar: Compliance certificate deadlines and financial reporting requirements by borrower
• Amendment tracking: Covenant relief amendments, pricing changes, and basket modifications indexed by date

Use case: Portfolio covenant dashboard

A direct lending fund with 35 portfolio companies needs to monitor covenant compliance across the portfolio. Each credit agreement has 3-5 financial covenants with different definitions, test periods, and cure rights.

Traditional approach: Analysts manually extract covenant definitions from each credit agreement. Build Excel models to calculate compliance. Update quarterly. No early warning system. Reactive, not proactive.

With Omega:

• Upload 35 credit agreements and all amendments (15,000+ pages)
• Omega extracts all financial covenant definitions in 8 hours
• Receive structured covenant database with exact formulas and trigger levels
• Integrate with portfolio company financials for automated compliance calculation
• Get quarterly alerts when covenant cushions fall below 15% threshold
• Identify 4 companies approaching leverage covenant triggers 2 quarters in advance
• Proactively negotiate amendments before defaults occur

Documents processed

• Credit agreements (senior, subordinated, mezzanine)
• Credit agreement amendments and waivers
• Intercreditor agreements
• Compliance certificates and financial reporting packages
• Covenant relief amendment requests
• Forbearance agreements

Covenants tracked

• Leverage covenants: Total debt / EBITDA, senior debt / EBITDA, net leverage ratios
• Coverage covenants: Interest coverage, fixed charge coverage, debt service coverage
• Liquidity covenants: Minimum cash, minimum liquidity, working capital requirements
• CapEx limits: Annual and cumulative capital expenditure baskets
• Basket restrictions: Investment baskets, restricted payment baskets, debt incurrence tests

Output deliverables

• Covenant definition database with source citations
• Trigger level matrix by testing period
• Cure provision summary (equity cure rights, limitations, cure periods)
• Compliance calendar with reporting deadlines
• Amendment history log with covenant changes indexed
• Portfolio covenant dashboard showing cushion by company and covenant type

See it in action

Explore the DD Checklist Reconciliation screen — 52 diligence items mapped against a live VDR, with covered / needs review / missing status for each.

Open DD Checklist →38/52 items covered · 73% complete

Demo dashboard · illustrative data only