What is Performing Credit?
Performing Credit funds focus exclusively on debt instruments where borrowers are current on all payments with no signs of stress. This sub-category targets companies with DSCR > 1.5x, healthy balance sheets, and established repayment track records.
- Disciplined Credit: Only borrowers with strong repayment history and financials
- High Coverage: DSCR > 1.5x and interest coverage > 2x required
- Investment Grade Focus: Primarily BBB+ and above rated instruments
- Quarterly Income: Regular distributions make it suitable for income planning
- Capital Preservation Priority: Return OF capital before return ON capital
Credit Selection Standards
Performing credit funds apply conservative lending criteria:
- Minimum 3 years of audited financials with positive EBITDA
- Net Debt / EBITDA below 3x for manufacturing; 4x for services
- Promoter contribution minimum 30% of total project cost
- Mandatory escrow of cash flows and first charge on receivables
- Monthly MIS and quarterly chartered accountant certificate required