Covenant fright: Asia’s high yield boom comes at expense of investor protection

Here are two facts.

One: a bank tells us that its year-to-date volumes in Asian high yield bond issues are up fourfold in a year.

Two: Moody’s says the covenant quality on Asian high yield bonds has fallen to its weakest level on record.

The two are not unrelated.

These are remarkable times for high yield, in Asia and worldwide. Globally, Moody’s says that 2018 is already on track to be a record for high yield in dollars, eclipsing 2017’s $453 billion, itself a record.