Moody's warns investors about high-yield bonds

05/13/2010 | Bloomberg Businessweek

Moody's Investors Service said companies are issuing high-yield bonds with the weakest creditor protections in years, as investors become increasingly optimistic that the economic recovery will spur a rally in such bonds. "This trend represents more than an episode of 'back to the future,' " Moody's analysts wrote. "It reflects a weakening in covenant protections even below those existing at the peak of the market, in 2006 and 2007."

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