For bond investors, the hunt for yield continues amid a low
interest rate environment, but high yield experts warn of
growing risks as investors accept weakening covenants for
"Investors are willing to accept further weakening of
covenants because Asian covenants are still generally
significantly tighter than their peers in Europe and the US,"
said Fredric Teng, head of high yield, debt capital markets,
Greater China and North Asia at Standard Chartered. "Some of
the deals in the west, particularly those from sponsor-owned
companies, are extremely aggressive."
Teng added that from a global emerging markets perspective,
high yield bonds from Greater China have been outperforming,
and continue to offer better value than other parts of the
"The trend we have observed in the broader Asian market is a
bifurcation in approach to covenant packages between Chinese
high yield issuances and non-Chinese high yield issuances,"
said Paul Olivera, executive...