Negative Rates Are Turning This Corner of the Credit Market Crazy
Negative rates mean zero percent interest for investors in securitized debt
An empty cafe terrace is seen at Puerta del Sol in Madrid.
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Negative interest rates are an odd fish in the world of finance given that they basically wreak havoc on a central tenet of investing; that investors will be compensated in some way for, you know, investing in things.
Bloomberg's Alastair Marsh reports today on POPYM 2007-2 A3G, a 2007 securitization deal that bundled together loans made to small businesses in Spain. Trustees for the bonds appear to be halting coupon payments to the debt's investors after a benchmark interest rate to which the deal is tied turned negative in recent days.