Need for protection in corporate bond market

Bondholder value is becoming an increasingly important issue at a time when companies are being pressured to provide shareholder value, at the expense of lenders. Event risk in the corporate bond market is increasing the importance of bond covenants, which can provide protection for specific actions within the company, such as corporate gearing levels or the sale of some of specific assets. An example of the usefulness of bond covenants is when Stagecoach recently sold its leasing unit off, Ian Spreadbury, senior portfolio manager of fixed income at Fidelity, says. This unit within the b...