FundFire recently featured new findings from Allvue, highlighting a major shift in private credit covenant structures. According to Allvue data, key financial covenants are appearing far less frequently in private debt agreements than in prior years. By 2025, the majority of private credit loans no longer included foundational protections such as fixed charge coverage, interest coverage, or total leverage ratios – a change driven largely by heightened competition among lenders.

The research insights are drawn from Allvue’s enterprise software and data infrastructure platform, which spans roughly 75,000 loans and 50,000 borrowers. A focused analysis of nearly 2,000 loans issued between 2022 and 2024 highlights what Allvue’s Nate Eisenberg, Product Manager for Private Debt, describes as a “narrowing of covenant packages.”

“This narrowing changes the early-warning system investors rely on. Coverage covenants are designed to capture cash flow stress before it shows up in balance sheet leverage. Their removal means lenders are trading real-time operational visibility for structural simplicity – a trade-off that works in strong markets but compresses the window to identify deterioration when conditions soften.”

– Nate Eisenberg, Product Manager for Private Debt, Allvue

The decline in covenant protections reflects a broader shift in private credit toward faster execution and simpler structures, often at the expense of early risk detection. As uncertainty increases, lenders may need to rethink how they monitor portfolio health and respond to emerging stress.

🔍Want to Dive Deeper?

Reach out to us to discuss the full findings directly, or explore Allvue’s latest research, Systematic Covenant Monitoring in Private Credit: The PODS Case Study. It’s an essential read for lenders aiming to stay ahead and optimize their credit monitoring strategies.