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EARLY DEFAULT SIGNAL

Private Credit & Direct Lenders: Know Before the Covenant Breaks

A covenant breach is usually the last sign, not the first. NPKA™ monitors a borrower's real operational condition between reporting periods, without requiring cooperation or advance notice. It gives you an independent read on credit quality before a quarterly report confirms what was already happening on the ground. Earlier signal means more options.

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PC & DL Insight

See the default before the covenant does.

Covenant-lite deals jumped from 4 percent of direct lending transactions in 2023 to 21 percent in 2025 (Proskauer), stripping out one of the earliest warning triggers lenders used to rely on. BDC share prices have traded below net asset value on liquidity concerns, and defaults in leveraged credit surfaced through 2025. A lender's visibility into a borrower's real operational health between reporting periods is otherwise limited to whatever the borrower chooses to self-report.