Covenants: crisis of confidence

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