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High-yield covenant quality plummeted in June - Moody's

Published 07/12/2017, 07:49 AM
Updated 07/12/2017, 07:49 AM
© Reuters.  High-yield covenant quality plummeted in June - Moody's
  • Covenant quality of North American high-yield bonds "drastically worsened" in June, according to Moody's.
  • The agency's Covenant Quality Index rose to 4.48 from 4.26, now just four basis points shy of its all-time worst-ever score of 4.52 set in August 2015 (the index ranges from 1 to 5, with 1 the strongest investor protections, and 5 the weakest).
  • At issue was a large concentration of "high-yield lite" bonds which automatically receive a score of 5 on that index. There was also a high volume of private-equity-sponsored paper that was rated at 4.31 - a massive deterioration from May's 4.04.
  • ETFs: HYG, JNK, DHY, HIX, PHT, HYLD, EAD, HYT, JQC, CIK, DSU, ACP, SJB, ANGL, NHS, MCI, KIO, ARDC, AIF, CIF, PHF, IVH, FHY, GGM, MPV, JSD
  • Now read: Search For Yield: Bond Funds Or BDCs?


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