Covenants | Moody's

SECTOR IN-DEPTH

North American Loan Covenant Quality Indicator: Low volume kept loan covenant quality flat last year, but 2021 is off to a strong start

11 Feb 2021|Moody's Investors Service

The LCQI stayed flat at 4.11 (weak level protection) in the third quarter of 2020 because of low issuance, but volume in 2021 is set to increase.

SECTOR IN-DEPTH

Chinese property bonds take covenant quality scores to all-time weakest level

25 Jan 2021|Moody's Investors Service

The average covenant quality (CQ) score for Asian fullpackage high-yield bonds in Q4 2020 weakened to 3.63 (weak), a new all-time weakest quarterly score, from 3.48 (weak ↑) in Q3 2020.

SECTOR COMMENT

Covenants – Asia: Asian bonds with higher instrument ratings have weaker covenants

29 Sep 2020|Moody's Investors Service

Ba-rated full-package1 bonds issued by Chinese property and Chinese industrials companies have weaker covenant quality (CQ) scores than their respective B-rated bonds, reflecting that Ba-rated bonds feature weaker covenants.

SECTOR IN-DEPTH

North American Bond Covenant Quality Indicator: CQI achieves best score since 2019 as low-rated bonds continue to dominate

17 Dec 2020|Moody's Investors Service

The CQI improved to 4.41 (weakest) in November from 4.44 (weakest) in October and 4.50 (weakest) in September. But the indicator remains above 4.40 for a record 19th consecutive month.

SECTOR COMMENT

Leveraged Loan Covenants - North America: A decade of loosening credit protections forces creditors to compromise or fight

17 Nov 2020|Moody's Investors Service

Eroded credit protections, including covenants, enable distressed borrowers to incur debt on terms detrimental to existing investors, making litigation and brinkmanship more likely.

SECTOR IN-DEPTH

North American Loan Covenant Quality Indicator: Covenants barely budged even as the loan market ground to a temporary halt

27 Oct 2020|Moody's Investors Service

The LCQI showed only minimal improvement from last quarter's record-weakest measure, despite the near-complete shutdown of the loan markets.

SECTOR IN-DEPTH

Emerging Markets Covenant Monitor: Emerging Markets covenant quality scores reach all-time worst level amid slowing issuance

05 Oct 2020|Moody's Investors Service

The average covenant quality score for full-package EM bonds issued during the 6 months to 30 September 2020 worsened to 3.45 (weak ↑) from 3.25 (moderate ↓) for the previous 6 months.

SECTOR IN-DEPTH

High-yield bond covenants — China: Chinese property developers loosen debt covenants in 2020 amid pandemic

21 Sep 2020|Moody's Investors Service

More Chinese property developers are preserving their debt incurrence capacity by using more easily satisfied debt incurrence tests and larger debt carve-outs for their bonds issued in 2020.

SECTOR IN-DEPTH

Covenant-relief amendments skyrocket as revolving lenders extract concessions

21 Jul 2020|Moody's Investors Service

The surge indicates that borrowers are exhausting their covenant cushions and are worried about breaching their maintenance covenants. Many were facing liquidity pressure before the crisis.

Bond Covenant Quality

Bond Covenant Qualtiy Assessments

Bond Covenant Quality Snapshots

Moody's Investors Service

List of all Bond Covenant Quality Snapshots to date.

Loan Covenant Quality

Loan Covenant Quality Assessments

Loan Covenant Quality Snapshots

Moody's Investors Service

List of all Loan Covenant Quality Snapshots to date.