Jul
14
Homebuilders Offer Weakest Junk-Bond Protection, Moody’s Says
By-
‘High-yield lite’ prevails at 70% in North American sector
-
Investors buy anyway, in part because land doesn’t depreciate
Junk bonds issued by homebuilders offer the weakest covenant protections of any non-financial sector in North America, but investors are buying anyway because land is viewed as such a strong underlying asset, Moody’s Investors Service said.
High-yield homebuilding bonds are three times more likely to carry the looser restrictions that are usually granted to investment-grade borrowers, according to a Moody’s July 14 report. Seventy percent of the sector’s bonds are governed by such “high yield-lite” features, compared with just 23 percent of all bonds in North America, Moody’s said…
Homebuilders Offer Weakest Junk-Bond Protection, Moody’s Says
