AI for private credit
Ultramarine Work reads the credit agreements, borrower packs, QoE reports, agings and rent rolls in the deal folder and drafts the covenant model, borrowing base, credit memo and mark workpapers. Every figure names the file it came from.
Bridgeton-covenant-model.xlsxExample| Test | Requirement | Actual | Headroom | Source | Explanation |
|---|---|---|---|---|---|
| First lien net leverage | ≤ 5.50x, stepping to 4.50x on Mar 31, 2029 | 5.14x vs cert 5.02x | 0.36x | Q3 certificate, §7.11(a) | The Sep 30 certificate nets all $19.6m of cash, but §1.01 caps netting at $10.0m. |
| Fixed charge coverage ratio | ≥ 1.15x | 1.41x | 0.26x | Q3 certificate, §7.11(b) | Cash flow of $53.7m after capex and taxes covers debt service of $38.1m. |
| Minimum liquidity | ≥ $12.0m at all times | $30.6m | $18.6m | Q3 certificate, §7.14 | Liquidity counts $19.6m of cash and $11.0m of revolver availability. |
| Adjusted EBITDA add-backs | Add-backs ≤ 30% of LTM EBITDA | $7.4m (10.4%) | $14.0m | QoE report, §1.01 definition | Accepted add-backs cover severance at the Dandon plant and M&A fees. |
| General RP basket | Greater of $10.0m and 10% of EBITDA | $10.0m | $10.0m unused | Q3 certificate, §7.06(b)(i) | The basket is available even though the separate 4.50x dividend condition fails. |
NoteGross back $9.6m of netted cash, so leverage is 5.14x, and the 4.50x step-down in 2029 fails without EBITDA growth of $11.1m.
Ask it for
“Draft the Project Halcyon credit memo for the $200m Alderveen dental unitranche, including leverage and coverage, a downside case and the covenant package.”
Halcyon-credit-memo.docx“Check Halcyon’s QoE against the management accounts, rebuild the $34.8m to $41.2m EBITDA bridge, test every add-back and set the working capital peg.”
Halcyon-QoE-review.xlsx“Build the covenant model for Bridgeton Components with the 30% add-back cap, leverage at 5.5x stepping to 4.5x by 2029, the 1.15x FCCR and the RP baskets.”
Bridgeton-covenant-model.xlsx“Rebuild Cascade’s January 31 borrowing base, 90-day and cross-aging ineligibles applied, the $4m Sandoval Metals concentration cap, 85% and 60% advance rates.”
Cascade-borrowing-base-Jan31.xlsx“Model the Verrick Outdoors waiver, full-spread PIK through year-end, cash and PIK interest by quarter, headroom at the 5.0x reset covenant, a $15m equity cure.”
Verrick-waiver-memo.docx“Update the Fund III Q4 marks at the December SOFR curve, our mark beside the valuation agent’s where they differ by 2% or more, flux on the movers.”
Fund-III-marks-Q4.xlsx
Inside the Private Credit mode
Tie-out and page-turn review
Ties out the memo before IC, figure by figure against the borrower pack, the QoE or the agreement, and keeps the marked-up file as proof the work was checked.
Three statement and operating models
Rebuilds the borrower’s statements and the sponsor’s model, links the debt schedule, and runs the downside case the committee reads first.
Valuation
Sizes the enterprise value you are lending against using trading comps, precedents and a DCF, and shows the equity bridge the sponsor’s check has to fill.
Credit underwriting and covenants
Writes the memo, tests leverage and coverage on the agreement’s own definitions, and sizes baskets and incremental capacity before the term sheet goes out.
QoE and working capital
Reads the QoE line by line and rebuilds the adjusted EBITDA bridge, then sets the working capital peg and net debt bridge the closing statement will use.
Investment research and IC memos
Drafts the IC memo with a falsifiable thesis, a sized downside and the open diligence items named, so the committee argues substance instead of format.
M&A diligence and disclosure schedules
Turns the data room into a red-flag report and drafts the disclosure schedules, with consents and change of control tracked across the sponsor’s structure.
Debt capital markets and leveraged finance
Prices a new unitranche or note against comparables on spread, OID and call protection, and lays every bank’s commitment papers, flex and fees side by side.
Asset based and specialty lending
Recomputes the borrowing base off the agings, tests eligibility and dilution, and runs LTV on the NAV facility. It also summarizes the field exam.
Amendments waivers and workouts
Models the waiver as written, with PIK turn-on, covenant resets and cure math, plus the recovery if the sponsor’s cure never shows up.
Restructuring and liquidity
Keeps the 13-week cash flow honest, builds the DIP budget, and models recoveries by class when the fulcrum sits below you.
Fundraising and LP materials
Builds the deck and the DDQ, gives gross and net returns equal prominence, and keeps hypothetical or predecessor performance labeled as the rule requires.
Cre underwriting
Normalizes the rent roll and T-12, sizes the loan on DSCR and debt yield with cap rates struck on the comps’ NOI basis, and runs the hold and sell cases.
Fair value financial reporting valuations
Prepares the ASC 820 mark workpapers the valuation agent will go through, the PPA when a borrower buys a business, and the year-end impairment tests.
- Office skills
- Excel, Word, PowerPoint, PDF
- Tools
- Read, edit and write files, Search files, Run code, Search and read the web, View images
- Connectors
- SharePoint, Google Drive, Gmail, and additional custom connectors
- House style
- Your fonts, layouts and rules, on every file
How it works
- 1
The deal folder
Add the credit agreement with every amendment, the term sheet, the QoE report and the sponsor’s model. Drop in the borrower’s monthly P&Ls and balance sheets, the AR aging and inventory report, and the memo template your committee expects.
- 2
Brief it like an associate
Tell it to spread four quarters on the covenant definitions, rebuild the borrowing base and price the unitranche against comps. What comes back has live formulas, a source for each figure and the unreconciled gaps listed.
- 3
Tick and tie, then decide
The source documents sit beside the numbers, so the page turn checks the argument, not the plumbing. You decide what goes to committee, which certificate lines you dispute, and what lands on the watchlist. It does not make the IC call.
Who it’s for
Direct lending, private credit and specialty finance investors at credit funds, BDCs, insurers and bank-affiliated lenders, from analyst to managing director.
Questions
Can it read a 300-page credit agreement without misreading the covenants?
Yes, it reads the agreement and each amendment, then builds the covenant model with the leverage and coverage levels, test dates, basket sizes, add-back caps and the definitions the ratios are computed on. Every term points back to the clause it rests on, and a term it cannot trace is left open rather than filled in. It recomputes headroom when the quarterly compliance certificate lands. Counsel still reads the document where interpretation decides the number, because a missed carve-out will not show up as an error.
What happens when a number does not tie to anything?
It says so instead of guessing. Its skills tell it to cite the source file for every figure and to note what it could not find or reconcile, so a missing AR aging or an EBITDA add-back without support comes back flagged, never papered over. None of that removes your obligation to check. Review every file it touched before anything reaches committee, and recompute the figures that drive the decision.
Is it safe to put borrower financials and data room papers into it?
That call belongs to your compliance team and counsel, not to the software. Credit agreements restrict who may receive borrower information, so counsel decides whether an AI vendor counts as a permitted recipient, and the newer NDAs say outright that confidential information may not go into AI tools. Have the clause read before anything goes in. Mechanically, the app changes nothing outside the project’s folder, and the content it works on is processed on Paper Instruments’ servers.
What can it read on my laptop, and where does the content go?
Ultramarine Work changes files only in the project’s folder. When a request needs it, it can read files elsewhere on your computer, never passwords, keys or app data, and you can turn that off in settings. The model runs on Paper Instruments’ servers, so the content it works on is sent there to be processed. Paper Instruments is SOC 2 Type II, and our security and compliance details are on our compliance page.
Do the marks survive our valuation agent and the auditors?
No, expect challenges, so treat each mark like a draft handed in by an analyst. The app builds the DCF and the comps, documents the inputs and traces every number to its source file. It does not replace your valuation policy, the independent valuation agent or the valuation committee, and it signs nothing. No figure it produces is guaranteed. The person who marks the loan owns the judgment.