latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/leveraged-loan-news/covenant-lite-share-us-leveraged-loan-market-hits-another-record-high content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list

Covenant-Lite Share of US Leveraged Loan Market Hits (Another) Record High

S&P Global Market Intelligence

Riskier European Corporates Lock In Record-Low Cost Of Debt

S&P Global Market Intelligence

Video analysis: European leveraged loan market: M&A, supply/demand, bifurcation, more

S&P Global Market Intelligence

US Distress Ratio Climbs To 8.5%, Led By Surging Oil & Gas Segment

S&P Global Market Intelligence

S&P 'weakest links' tally at 10-year high, suggesting more defaults

Covenant-Lite Share of US Leveraged Loan Market Hits (Another) Record High

covenant-lite loans

Note: This story and chart have been updated to include July-end numbers. 

Covenant-lite loans, which offer less protection to institutional investors than do traditionally structured credits, continue to make up more and more of the $943 billion U.S. leveraged loan market. At the end of July, 72.7% of all outstanding loans were cov-lite, according to LCD. That’s the most ever, and is up from roughly 69% at year-end.

Cov-lite loans are credits that have  incurrence covenants – similar to a junk bond – rather than more restrictive maintenance covenants (you can read much more about this in LCD’s Loan Primer). For obvious reasons, they are more attractive to issuers, and have gained steady acceptance from loan arrangers and investors, particularly since 2012, when the U.S leveraged loan market found a higher gear after the financial crisis of 2007-08.

While the popularity of cov-lite loans has prompted worries in some corners of the market, historically, these deals have not defaulted any more frequently than loans with traditional covenants. Then again, as naysayers are fond of pointing out, they’ve never comprised this much of the market before, so they will be under scrutiny once the current credit cycle turns. – Staff reports

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story first appeared on, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.