Covenant quality on high-yield hits record low says Moody's

|By:, SA News Editor

The average covenant-quality score for high-yield bonds deteriorated to 4.36 in February from 3.84 one month previous (ranking is from 1 to 5, with 5 the weakest). It's the lowest print since Moody's began tracking the gauge in January 2011.

The decline was driven by a near-record percentage of high-yield-lite bonds - 39% of issuance in February vs. just 10% in January. “These bonds lack a debt incurrence and/or a restricted payments covenant and automatically receive our weakest score of 5.0," says Moody's Evan Friedman.

ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, BSJH, HYLS, XOVR, THHY, UJB, QLTC, SHYG, BSJK, HYZD, BSJJ, HYND