Bond covenants can be strengthened by a consensus between
investors and issuers, according to a white paper released
today by The Credit Roundtable Group.
The white paper points out that many bonds have decreased in
value recently because of the weaker language they include in
their covenants, and a lack of transparency over what
protections are actually provided.
The Group suggests model covenants for investment grade
bonds, which it hopes will restore confidence to bondholders
and perhaps increase liquidity. It stresses, however, that the
white paper is intended as a stimulant for debate, and a route
to find better industry standards through discussion and
Over 50 financial firms, fixed income investment managers
and public pension funds have joined to form The Credit
Roundtable Group. It includes names such as AIG Investments,
BlackRock Financial Management, Fidelity Investments and