Odd Lots AI Can Tell Us Something About Credit Market Weakness
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Dec 4, 2025 
Dan Wertman, co-founder and CEO of Noetica, shares insights on current credit market weaknesses using AI to analyze deal documents. He discusses emerging trends in credit agreements, warning of potential blowups amid tightening lender protections. Wertman explains the importance of EBITDA addbacks and how creditors are preparing for distress, revealing the complexities of recent high-leverage financing deals. The conversation also highlights risks associated with rapid dealmaking versus due diligence, particularly in the evolving AI landscape.
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Deal Terms Are The Market’s Plumbing
- Deal terms are the plumbing of transactions and determine who gets what in edge cases that matter financially.
- Noetica uses AI to benchmark deal language so lawyers and bankers can quantify whether terms are market or off-market.
The $900M Mistake That Changed Contracts
- Dan recounts the Citibank Revlon erroneous $900 million payment that exposed silence in agreements.
- That event spawned an 'erroneous payment' term which now appears in ~90% of deals.
Flight To Fortification In Contracts
- Noetica sees a 'flight to fortification' with lenders demanding more structural protections like anti-PetSmart and J.Crew blockers.
- These terms' adoption rates jumped sharply from 2023 baselines to record levels in recent quarters.
