Covenants: crisis of confidence

loan origination

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The typical commercial loan portfolio manager faces a problem not of his making every day: he has to deal with assets passed down to him from his bank’s origination desk that do not make a lot of commercial sense. Their risk-adjusted return is rarely calculated at origination and their performance pricing grids and loan covenants are frequently based on measures the manager probably does not believe properly reflect a comprehensive view of credit risk. It shouldn’t be just the portfolio mana