Junk-grade companies that owe a lot of money to banks have been hammered in the credit crunch. But not all so-called leveraged loans are created equal. Among those with stringent credit agreements, a hiccup in a borrower's quarterly results can trigger a default. "Covenant lite" loans, by contrast, offer more breathing room.rnIn the credit panic investors have scarcely pondered the differences between one leveraged loan borrower and another. With a semblance of normalcy returning to credit markets, however, borrowers solidly in compliance with loan covenants should outperform the broad market in coming months, says Justin M. Smith, senior covenant analyst at the Bank Debt Review. For help finding winners, we asked BDR publisher Xtract Research to look at the two most common covenants for 50 public companies with the biggest leveraged loans tracked by S&P s LCDX index.
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