August was the 4th-worst month of 2013, and a continued decline in September "would cement a trend toward worsening investor protections."
The average covenant quality score of 4.01 in August compares to 3.79 in July. The index uses a 5-point scale with 1 representing the strongest protections and 5 the weakest. The 3-month moving average, however, improved a hair in August as weaker months from earlier this year rolled off.
A key driver of August's poor print was a surge in Ba issuance which typically has weaker covenant packages - nearly 50% of all issued last month was Ba vs. a typical 27%.