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News and Insights - 2019

Interest Rates Still Matter, But Differently

By Bernhard Eschweiler, PhD 12.2019 — 2 minute read

Lower interest rates are less effective than before in spurring investment in the real economy
Households and banks have cut debt burden, aided by low interest rates
However, corporations and the government are going in the opposite direction
This raises the concern that low interest rates and a struggling savings industry may create imbalances and risks that could cause more financial tensions in the next downturn

How Low Will Yields Fall?

By Bernhard Eschweiler, PhD 10.2019 — 2 minute read

Recent yield declines look to be largely cyclical.
The current low-yield environment is probably here to stay, but we do not expect the US to follow Europe or Japan to negative yields.
We see policy as the main risk that could push yields lower, but also higher.

Zais revamps credit policy to reflect ESG external link opens a new website and paywall

By Creditflux 09.2019 — 1 minute read

Zais Group has become the latest credit manager to implement an environmental, social and governance policy across its business...

Read More external link opens a new website and paywall (External Link Paywall)

Leveraging emerging markets through loan securitization external link opens a new website

By Jakarta Post 08.2019 — 1 minute read

An international impact asset manager called ResponsAbility Investments AG has recently closed deals on securitization of loans to microfinance and finance institutions catering to small and medium enterprises (SMEs) worth US$175 million...

ZAIS Insights - Yes, Financial Covenants Are Important, But How Important?

Deficits Don't Matter Until They Do

By Bernhard Eschweiler, PhD 08.2019 — 2 minute read

The "budget deal" is a relief, except for the budget.
There is a need for more public investment, but not fiscal stimulus.
Low interest rates are no panacea for government debt sustainability.

Yes, Financial Covenants Are Important, But How Important?

By ZAIS Group 07.2019 — 2 minute read

We at ZAIS, like many leveraged loan managers, are monitoring the erosion of financial covenants. However, we also want to caution that investors should not overweight their covenant-lite (“Cov-lite”) concerns and lose sight of the merits of sound fundamental analysis, diversification and active portfolio management.

Zais prices new CLO with record five classes of fixed-rate debt external link opens a new website and paywall

By Creditflux 07.2019 — 1 minute read

Zais Group has priced a new issue CLO via JP Morgan that issues five classes of debt paying fixed rates of interest...

Read More external link opens a new website and paywall (External Link Paywall)

First Microfinance CLO Since 2007 Sold by Swiss Impact Investor external link opens a new website

By Bloomberg 07.2019 — 1 minute read

JPMorgan structured deal and CLO manager ZAIS had adviser role

Funds provide capital to 5.6 million borrowers, mainly women

Impact investor responsAbility Investments AG sold a $175 million so-called microfinance collateralized loan obligation...

ResponsAbility closes impact securitisation at $175 million external link opens a new website and paywall

By Creditflux 07.2019 — 1 minute read

ResponsAbility, a Zurich-headquartered impact assessment manager, has closed a $175 million securitisation of loans to microfinance and SME-finance providers in emerging markets...

Read More external link opens a new website and paywall (External Link Paywall)

MMT is Flawed

By Bernhard Eschweiler, PhD 06.2019 — 3 minute read

The current debate around MMT suggests this theory could be viewed as a short-term hype that will be over after the US elections. We fear that MMT will be around for longer.

Housing on Track for Moderate Gains

By Bernhard Eschweiler, PhD 04.2019 — 2 minute read

Housing was the soft spot of the U.S. economy in 2018. In our judgment, that was not a sign of fundamental trouble like excesses as in the bubble years, but binding affordability constraints, especially for lower-income families.

Structured Products: The Sixth Man of a Fixed Income Portfolio

By ZAIS Group 03.2019 — 2 minute read

Much like basketball’s "sixth man," the addition of structured products to a broader fixed income portfolio can both reduce risk and enhance returns. In this article, we discuss the versatility and benefits of structured products within a fixed income portfolio.

Fears of a near term recession seem overblown

By Bernhard Eschweiler, PhD 02.2019 — 2 minute read

Economists like to refer to the yield curve when talking about recession risks. This is because the yield curve has historically been a good predictor of recession risk...

2016 Déjà Vu

By Bernhard Eschweiler, PhD 01.2019 — 2 minute read

Strategists like to look for historic parallels when analyzing current and future economic and market conditions. A popular comparison at the moment is early 2016...

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