Moody's Investors Services said the average covenant quality score for high-yield bonds issued in the 12 months ended Sept. 30 was 4.29, 0.12 points weaker than the average for the same period a year ago.
The firm's CQ scores range from 1 for the strongest protections to 5 for the weakest.
According to Moody's research note, construction and homebuilding companies (3.57) offer the strongest covenant protection among private equity-sponsored bonds, followed by the oil and gas sector (3.81). Technology issues backed by private equity offered the weakest protection (4.31).
