Leveraged Loan Covenants – North America: Weak covenants signal a future with higher leverage and more dividend recaps
14 Sep 2021|Moody's Investors Service
Leveraged loans continue to provide borrowers with extraordinary capacity to incur debt and pay dividends to equity holders at their lenders' expense.
Loan Covenants – North America: Borrowers push incremental and refinancing protections to the edge as market absorbs a surge of loans
03 Aug 2021|Moody's Investors Service
For new money term loans, borrowers are moving to access their incremental facilities with fewer strings attached. Terms around incremental debt capacity are also becoming more aggressive.
Covenants — Asia: Investors have lost negotiating ground as covenant quality scores have weakened by over a third from 2011 to 2020
02 Sep 2021|Moody's Investors Service
Investors have sacrificed covenant protections for yield over the past decade. Based on our analysis of 422 Asian full-package high-yield bonds from 2011 to 2020, bondholders have been increasingly exposed to weaker covenant protections as bond issuance from Chinese property developers has increased in proportion and these bonds have included weakening covenant structures over the years.
North American Bond Covenant Quality Indicator: CQI returns to pre-pandemic levels as investors sacrifice protections for yield
29 Jul 2021|Moody's Investors Service
The CQI worsened to 4.45 in the second quarter as investors resume the trade-off of covenants for yield. Volumes remain near last quarter's record, while spreads further narrow.
North American Loan Covenant Quality Indicator: Protection hits record-worst as volume surges on pent-up demand
03 May 2021|Moody's Investors Service
The LCQI weakened by 36 basis points to 4.47 in Q4 2020, as a resurging market allowed borrowers to refinance on terms much more friendly than what were available in the first half of 2020.
19 Jul 2021|Moody's Investors Service
CQ scores improved modestly for two consecutive quarters. The average covenant quality (CQ) score for Asian full-package high-yield bonds improved in the second quarter of 2021 to 3.44 (weak ↑) from 3.54 (weak ↑) in Q1 2021 and an all-time weakest score of 3.63 (weak) in Q4 2020.
EM Covenant Monitor: EM covenant quality scores reach a new all-time weakest level amid a surge in issuance
10 May 2021|Moody's Investors Service
Emerging markets (EM) covenant quality scores weaken further. The average covenant quality score for full-package EM bonds issued in the six months ended 31 March 2021 weakened by 3% to an all-time weakest level of 3.56 (weak ↑) from 3.45 (weak ↑) for the six months ended 30 September 2020.