North Amer­i­can bond qual­ity low

The Pak Banker - - COMPANIES/BOSS -

The three-month rolling av­er­age of Moody's Covenant Qual­ity In­dex (CQI) reached an his­tor­i­cal low of 3.96 in Fe­bru­ary, driven by a high per­cent­age of Ba-rated bonds and high-yield lite covenant pack­ages. The mark breaks Jan­uary's record of 3.92, says Moody's In­vestors Ser­vice in a new report. "In­vestors are as­sum­ing more risk for less yield; av­er­age spreads to bench­mark yields have tight­ened steadily since July, although there was a slight spread wi­den­ing in Fe­bru­ary," said Moody's VP -- Se­nior Covenant Of­fi­cer Alex Dill, au­thor of the report, "North Amer­i­can Covenant Qual­ity In­dex: Bond Covenant Qual­ity Hits a New Low." Moody's be­gan track­ing the in­dex in Jan­uary 2011. Covenant qual­ity im­proved to a CQI record of 3.37 in April of that year. Covenant qual­ity of North Amer­i­can high-yield bonds has de­te­ri­o­rated steadily since hit­ting 3.41 in July 2012. The CQI re­sults for Fe­bru­ary are "weak," ac­cord­ing to Moody's five-point scale.

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