Amid investor cash, search for yield, covenant-lite loan activity hits record pace

Covenant-lite loans have come at an impressive clip in 2012 amid sustained investor liquidity and the continuing search for yield. Indeed, cov-lite deals - which have less-restrictive incurrence covenants, like high yield bonds, as opposed to more restrictive maintenance covenants - account for nearly 30% of loan volume so far in 2012 (this chart looks at first-lien loans only). That's a record pace, unmatched by even the pre-Lehman 2007 period, when the capital markets were at their frothiest.