Weak covenants threaten bond recovery values

The volume of loans outstanding with weak covenant protection is likely "put future enterprise and recovery values at risk", says Fitch Ratings.

"The tightening of market conditions does not change the historically weak level of covenant protection in the stock of outstanding loans," says William May, senior director in credit market research at Fitch.

Fitch conducted a review of a sample group of US issuers with a default rating of B+ or below that also had an outstanding loan with either a