Japan expects corporate bond issuers to start adding investor protection as it pushes the use of covenants, opening the way for lower-rated companies to enter the debt market.

A working group led by the Japan Securities Dealers Association finished a series of monthly meetings in June that discussed details of applying covenants to local corporate notes with lower ratings.

The group agreed on applying Change of Control clauses and reporting covenants on bonds of BBB+ and lower, while keeping conditions flexible, according to an official at JSDA. The former clauses protect investors when there’s a shift in company ownership, while the latter oblige issuers to notify investors when the likelihood of default rises.