The good news is that investors will find slightly betterprotection on leveraged loans this year. The bad news, according toMoody's Investors Service, is that loan covenants will remaincategorically weak for a fourth straight year.

“Investors in today's volatile market are being exposed torising risk as they forfeit key levers traditionally available tothem when a borrower is in financial distress,” Moody's analystslead by Enam Hoque wrote in a March 8 note to clients. Data“indicate that covenant protections remain stubbornly weak.”

Moody's loan covenant quality score, judged according to sevenfactors including asset sales without lender approval and the useof net debt in calculating leverage ratios, has remained “weak”since 2013.