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Moody’s To Rate Junk Bond Covenants
Credit rater will look at how much protection investors get from securities’ terms.
Moody’s Investors Service plans to begin grading the covenants of high-yield bonds based on how much protection investors get from the securities’ terms.
Each junk bond’s agreements will be scored on a one-to-five scale based on the rules for leverage, subordination and additional debt, according to an e-mailed statement from the New York-based firm. Moody’s said it plans to create an index that tracks covenant quality.
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