Asia top region for covenant strength

North America has seen covenants significantly weaken as credit supply expands.

Asia has been the most resistant region when it comes to watering down covenants on loans, according to analysis by Moody’s.

The North American market shows the lowest covenant quality with Europe, the Middle-East and Africa following behind.

Weakening loan covenants have been linked to the growing glut of credit available, and with the US economy performing well it has been flooded with record high levels of capital in recent years. Europe has seen a similar pattern though not to the same extent.

So for investors concerned about covenants, flocking to the developing Asian and Latin American markets could provide some peace of mind.