Portfolio Monitoring in Private Credit
Winning the deal is only step one. Protecting principal and ensuring returns comes down to portfolio monitoring. This guide covers dashboards, KPIs, borrower reporting, compliance checks, and early-warning systems every private credit platform should run.
← Back to GuidesWhat Is Portfolio Monitoring?
Portfolio monitoring is the ongoing process of tracking credit performance, covenant compliance, and borrower health. It’s where lenders turn documents into discipline and information into action.
Dashboards & Reporting
- Portfolio overview: exposure by sector, rating, sponsor, geography.
- Heatmaps: covenant headroom, liquidity, ratings drift.
- Trend analysis: EBITDA, leverage, cash conversion over time.
- Alerts: traffic-light borrowers and exceptions dashboard.
Key KPIs
- Revenue growth vs. budget
- EBITDA margin and adjustments discipline
- Cash conversion and free cash flow
- Leverage and interest coverage
- Working capital trends (DSO, DPO, inventory turns)
- Liquidity runway
Borrower Reporting
Effective monitoring starts with consistent, timely borrower reporting:
- Monthly financials and KPI dashboards
- Quarterly compliance certificates
- Audited annuals with management letters
- Event-driven reporting (acquisitions, asset sales, covenant cures)
Early-Warning Systems
- Financial drift: margin compression, missed budgets, declining liquidity.
- Operational red flags: churn, backlog declines, quality issues.
- Sponsor behavior: delayed reporting, aggressive adjustments, reluctance to support equity cures.
- Market context: sector headwinds, regulatory shifts, supply chain shocks.
The earlier you escalate, the more options you have.
Compliance & Certificates
- Quarterly covenant testing with headroom analysis.
- Tracking restricted payments, investments, and debt baskets.
- Building a compliance calendar for recurring obligations.
- Variance analysis between reported vs. actual cash flow.
Tools & Automation
- Automated ingestion of borrower financials and compliance certificates.
- Dashboards integrating KPIs, covenants, and alerts.
- Workflow systems for amendments, waivers, and IC memos.
- AI-driven monitoring to flag anomalies and trend drift.
Platforms like Orion are designed to automate this layer.
Conclusion
Portfolio monitoring is where credit alpha is preserved. Build disciplined reporting, track the right KPIs, escalate early, and leverage automation to scale. It’s not glamorous, but it’s where money is made or lost.