Neovim :terminal fails to clear ANSI background properly for some lines of output

[s1341]

• nvim --version:
  NVIM v0.4.0-1887-ge29b89ca5
  Build type: Debug
  LuaJIT 2.0.5
  Compilation: /usr/bin/cc -g -Wall -Wextra -pedantic -Wno-unused-parameter -Wstrict-prototypes -std=gnu99 -Wshadow -Wconversion -Wmissing-prototypes -Wimplicit-fallthrough -Wvla -fstack-protector-strong -fdiagnostics-color=always -DINCLUDE_GENERATED_DECLARATIONS -D_GNU_SOURCE -DNVIM_MSGPACK_HAS_FLOAT32 -DNVIM_UNIBI_HAS_VAR_FROM -I/home/shmaryar/src/neovim/build/config -I/home/shmaryar/src/neovim/src -I/home/shmaryar/src/neovim/.deps/usr/include -I/usr/include -I/home/shmaryar/src/neovim/build/src/nvim/auto -I/home/shmaryar/src/neovim/build/include
  Compiled by shmaryar@SHMARYAR

Features: +acl +iconv +tui
See ":help feature-compile"

system vimrc file: "$VIM/sysinit.vim"
fall-back for $VIM: "/home/shmaryar/src/neovim/install/share/nvim"

Run :checkhealth for more info

• vim -u DEFAULTS (version: ) behaves differently?
  Not relevant to standard vim, as it doesn't have :terminal
• Operating system/version:
  ubuntu 18.10
• Terminal name/version:
  kitty 0.14.3
• $TERM:
  xterm-kitty

Steps to reproduce using nvim -u NORC

nvim -u NORC
:terminal
cat <attached file>

26R4Gk1a.txt

Actual behaviour

There are green background bars all the way to the right on some of the lines. As seen in the screenshot:

Expected behaviour

No highlighting except for within the lines.

[justinmk]

Revisit after we have latest libvterm. #9494