Credit quality on the bond market
About half of the outstanding issues within the investment grade corporate bond market have the lowest possible credit rating by Standard & Poor’s, said Grant Glenn, the managing partner of Noble Wealth Partners. Investors are lending money to risky companies at a record pace and not protecting their investment.
“Normally, these lenders require covenants to ensure these companies do not engage in activities that would increase the chance of them defaulting on their debt obligations,” Mr. Glenn said. Today, 80% of new leverage loans don’t have these protections, up from 35% in 2009, and Mr. Glenn is worried what it will happen as interest rates rise in the New Year.