Design a borrower-level stress test that changes structure, monitoring, or decision outcome.
Stress case Base DSCR is 1.31x, but 42 percent of leases roll in 18 months on a refinancing office property. A generic downturn scenario will not answer the specific credit decision. Stress testing principles Vulnerability -> variable -> break point -> condition Stress testing should be governed, documented, and used. For a single credit, use means structure or monitoring changes. Generic recession Looks prudent, changes nothing The stress case becomes a structure decision. If a stress test does not inform a decision, it is decoration. 01 Vulnerability 02 Break point 03 Condition Find the weak joint Lease rollover is high…
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