Back in February 2013, when then-Fed governor Jemery Stein commented on the "overheating in the credit market", he noted that "the annualized rates of PIK bond issuance and of covenant-lite loan issuance in the fourth quarter of 2012 were comparable to highs from 2007." Indicatively the percentage of covenant-lite deals as a percentage of total then was a little under 30%. Shortly after that he quietly left the Marriner Eccles building, knowing well what is coming, and a good thing he did because since then the bubble across all credit products has left many dumbfounded, and nowhere is this more obvious than in the total volume of cov-lite deals, which has doubled since Stein's letter, and is now approximately at two third of all loan issuance.
In other words, just one third of all loans are not covenant lite.
So if the credit market was "overheating" when only one-third of all loans had no covenants, we wonder what Stein would say now, two years later, when just one-third of all loans have covenants... if anything?