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Bond Buyers Skip Fine Print as Low Rates Sow Complacency

To understand the rising concern about complacency in the corporate-debt market, look no further than the Clear Channel Communications Inc. bonds that investors showed up in droves to buy last month.

While the radio broadcaster has debt that’s 12 times its earnings and a credit rating that implies a default is a virtual certainty, it was still able to more than double the offering to $850 million. Not only that, the indentures governing the notes designed to protect bondholders lacked restrictions typically found in such risky offerings, such as limits on the company’s ability to issue more debt or shift cash to shareholders.