GC
Not ideal timing: Asian HY covenant standards dip
The quality of Asian high yield bond covenants dropped to an all-time low in the last quarter. Chinese property developers, making the most of a buoyant market, have been cited as the biggest cause. But as the region’s primary bond market continues to struggle, it’s unclear if that push for looser standards can continue.
High yield bond covenants in Asia have been weakening for more than a year, amid a strong bond market in 2017, according to market watchers. But this is only the latest drop amid a long-term trend. Covenant protection for Asian bonds has weakened in the last seven years,
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