If the EU carries out a proposal to finance 30% (€225 billion) of its planned €750 billion recovery fund through green bond issuance, it could become the main liquidity provider for a green safe asset, as well as the largest supranational liquidity provider for a green safe asset, according to a report recently published by S&P Global Ratings.
A larger pool of green assets would also help policymakers and central banks achieve their aim of greening the financial system. Today, the green bond market represents only 3.7% of total global bond issuance, making it difficult to ask market participants to build green portfolios. This will also likely reinforce the international role of the euro as a green currency.10
Following outreach by Moorgate, the news was covered by: Global Capital, DevDiscourse, Scottish Financial Review, International Financing Review, ESG Clarity, Chief Investment Officer, and Opalesque
The recent surge in social bond issuance indicates that the COVID-19 pandemic has not turned issuers’ or investors’ attention away from sustainable finance. Rather, interest seems to be growing, says a recent S&P Global Ratings report.
Corporations and financial institutions are likely to become more active in the social bond market as the pandemic accelerates private issuers’ interest in social considerations, the ratings agency believes.
In terms of issuance, Europe leads – reflecting its unique regulatory and political drive to stimulate activity in the sustainable finance markets. S&P Global Ratings believes these regional trends indicate that riskier investments, earmarked for social objectives, may be drawing increasing investor interest.
Following Moorgate’s outreach, the report was covered by Environmental Finance, ZAWYA, ETF Trends, Chief Investment Officer, and Philadelphia Tribune
As COVID-19, and the measures implemented to slow its spread, continues to impact economies around the globe, the link between Islamic finance and the social aspect of environmental, social, and governance (ESG)-focused investing are coming to the fore, according to S&P Global Ratings.
While the similarities between Islamic finance and the environmental and governance aspects of ESG have long been recognised, the social aspect of Islamic finance has until now been somewhat secondary. Now, with COVID-19 hampering core Islamic finance markets – and unemployment rates rising – the Islamic finance industry has been exploring the possibility mitigating the damage with social instruments.
S&P Global Ratings believes Islamic finance social instruments can support core Islamic countries, banks, and corporates in navigating today’s uncertain economic landscape.
Following outreach by Moorgate, the report was covered by The Peninsula Qatar, ZAWYA, Khaleej Times, Al Bawaba, Trade Arabia, Gulf News, Gulf Times, MENA FN, Al Khaleej Today, and Pakistan Observer
As S&P Global Ratings expands its London-based specialist Sustainable Finance team to incorporate ESG and climate risk, Michael Wilkins, Global Head of Analytics & Research, Sustainable Finance, and Paul Munday, Associate Director, Climate Adaptation and Resilience Expert, speak to Environment Analyst on the team’s new mandate, and how COVID-19 is impacting the ESG space.
While broadening the scope and scale of its ESG Evaluation, S&P Global Ratings’ Sustainable Finance team has also been building a team of experts in their respective fields. For instance, the latest addition to the team, Paul Munday, joined early 2020 to provide technical expertise on adaptation and resilience. Munday’s key role is to mainstream climate risks into the agency’s existing products, projects and programmes, as well as support external engagements and thought leadership.
To read the full article, please click here.
As investors and corporations alike begin to see the financial benefits of managing their environmental exposure, some unlikely sectors are beginning to engage in green finance.
With three major telecom companies – Verizon, Telefonica, and Vodafone – issuing green bonds in 2019, Michael Wilkins, Global Head of Analytics & Research, Sustainable Finance, S&P Global Ratings, considers the environmental contribution of these bonds in an article for Aldersgate Group.
While the emissions-heavy telecom sector could well benefit from green bonds as a means to invest in modernising its infrastructure and technology to reduce emissions, says Wilkins, investors have expressed concerns that these issuances may be opportunistically seeking a green label to fund projects that may lack positive environmental contribution.
Read the full article here.
Sustainability is increasingly becoming a priority, for investors and companies alike. With the rise in financing options available on the capital markets to fund environmental, social, and governance (ESG)-supportive growth, corporates around the world have access to a broader toolbox than ever before to align with Sustainable Development Goals.
Speaking to Investments & Pensions Europe (IPE), Noemie de la Gorce, associate director, sustainable finance at S&P Global Ratings says that new instruments – such as sustainability-linked bonds – can help investors “diversify their contribution to sustainability objectives.”
While tied to different incentive mechanisms, some investors may see these instruments as having the potential to be stronger drivers of change than green bonds – since vehicles like sustainability-linked bonds can give companies financial incentives to advance their sustainability agenda, by linking the cost of funding to specific sustainability objectives.
“Some investors see sustainability-linked bonds as more powerful than green bonds in embedding sustainability into a company’s strategy, because the environmental and social objectives apply to the whole company, instead of a specific transaction,” says de la Gorce.
To read the full article, please click here.
A lack of economic diversification, coupled with a sometimes-lower availability of external funding sources, means that a decreased oil and gas prices and shifting investor appetite could contribute to deteriorated creditworthiness for some GCC banks. That’s according to S&P Global Ratings, in its recent report mini-series exploring the credit risks that the transition towards cleaner energy sources could have on the GCC’s banks and overall economy.
While GCC economies have somewhat diversified away from oil since 2012, S&P Global Ratings’ hypothetical long-run stress test suggests that the average rating of a Gulf sovereign could fall by two notches from ‘BBB+’ to ‘BBB-’ if oil prices fall below US$40 by 2040, highlighting that the current pace of economic and fiscal diversification is insufficient to counter the decline in oil prices.
Following outreach by Moorgate-Finn, the research was covered by Trade Arabia, ZAWYA, AMEInfo, and The Peninsula Qatar.
Driven by an expansion of the pool of financing options for investors, the sustainable debt market will likely surpass US$400 billion in 2020, said S&P Global Ratings in the latest edition of its annual sustainable debt outlook.
According to the outlook, the strengthening of key market trends such as rising absolute global fixed-income issuance and private financing, as well as the regulatory and political push in Europe, will likely push green-labelled bond issuance to US$300 billion in 2020. Meanwhile, as investors continue to explore ways to contribute to sustainability objectives, the market will continue to diversify and innovate, with more nascent sustainable financing instruments complementing the continued expansion of the green bond market.
Following outreach by Moorgate-Finn, the report was covered by Financier Worldwide, Markets Media, Environmental Finance, ImpactAlpha and International Financing Review.
A recent report by S&P Global Ratings has concluded that growing competition from cheap renewable electricity, safety concerns, and rising costs of new plants are slowly undermining the viability of nuclear power.
“We see little economic rationale for new nuclear builds in the U.S. or Western Europe, owing to massive cost escalations and renewables cost-competitiveness, which should lead to a material decline in nuclear generation by 2040,” said Elena Anankina, the report’s author.
Despite these challenges, however, nuclear still has its role to play in the energy mix – largely due to the continual development of new nuclear capacity in Russia and China, supported by energy policies and significantly lower construction costs. Moreover, with regions such as Europe installing more intermittent sources, nuclear is playing a crucial role in ensuring grid stability.
Following outreach by Moorgate, news of the report was covered by Republic World, Stockhead here and here, NucNet, IREI, Euractiv, ESI Africa, Power Engineering International, and World Nuclear News.
S&P Global Ratings scored Adani Green Energy Ltd. Restricted Group 2 (AGEL RG2)’s proposed US$362.5 million green bonds E1/90 under its Green Evaluation – the highest score on the Green Evaluation scale of E1-E4, comprising a Mitigation score of 90, a Transparency score of 89, and a Governance score of 93.
The bonds will be used to finance and refinance solar photovoltaic (PV) power plants and related transmission infrastructure in Karnataka and Rajasthan, India.
“AGEL RG2’s intention to use 100% of the proceeds for solar PV power projects is the main driver of the high score,” said Cheng Jia Ong, the primary analyst of the Green Evaluation.
Following Moorgate’s outreach, news of the Green Evaluation was covered by Renewables Now and PV-Magazine.