Covenant packages in European secured high-yield have softened materially over the last three issuance cycles. Incremental debt baskets, EBITDA add-backs and J. Crew–style asset transfer permissions are now common even in deals marketed as senior secured.

We reviewed 142 secured high-yield issuances priced between 2021 and 2026 and scored each on twelve covenant dimensions, from restricted payments capacity to collateral leakage protections.

The headline finding: median collateral leakage protection has weakened by 38% relative to the 2018 baseline, while incremental debt capacity has more than doubled. In volatile credit cycles this drift translates directly into lower recoveries and slower trustee response when stress emerges.

The note concludes with a checklist trustees and security agents can apply at the term-sheet stage to keep the most material protections intact without re-pricing the deal.