Europe's booming junk bond market is provoking alarm among analysts who say investors are letting down their guard and risking future losses.

Dutch department store operator Hema BV, home improvement retailer Maxeda DIY Holding BV and supercar maker McLaren Group are the latest in a string of companies that have sold bonds with weaker investor protections, known as covenants, and with more loopholes written into the documents that govern the debt.

Typical covenants ban a company from taking actions that could weaken the chances of a bond getting repaid, such as heaping on more debt, pledging assets to other lenders or transferring control to new owners. Penalties can be harsh, with creditors entitled to demand costly fees as compensation or even immediate repayment of the bond's entire value.