"When you have a lot of money chasing deals, lenders may lose their
appetite for enforcing covenants, and are more willing to waive them,"
says Bill Chew, managing director for loan and recovery ratings at
Standard & Poor's, another ratings concern. Over time, fewer
constraints may encourage borrowers to pile on even more debt, and that
could weigh on some of these companies if interest rates rise or their
businesses slow.
The Wall Street Journal sounds the covenant alarm.
