On the Fritz

Issuers gain in covenant game

In the never-ending struggle over financing terms, issuers have been getting the better of it lately. With high-yield mutual fund inflows setting a record in 2003 and with a sizable chunk of the new issuance merely refinancing existing bonds, demand has outpaced supply.

The most obvious impact this phenomenon has had on pricing is an unprecedented one-year narrowing in the high-yield index’s spread versus Treasuries. Less easy to measure, yet unquestionably

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