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.
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.
Green bonds have proliferated since the first green debt instrument was introduced in 2007, with banks and corporate bond issuers leading the pack. However, project bond and emerging market issuers have been more hesitant.
Speaking on TXF Proximo’s podcast, “Transmissions”, Michael Wilkins, Global Head of Analytics and Research, Sustainable Finance, S&P Global Ratings, argues that this may not be the case for much longer.
“Because there is interest among investors to benchmark according to environmental contribution as well as credit quality, there may be opportunity for green project bonds in emerging markets to grow,” said Wilkins.
Meanwhile, he believes that green project bonds may well see a surge in market interest if the high level of environmental contribution that S&P Global Ratings generally sees from the asset class is made explicit in offering circulars.
According to S&P Global Ratings, the development of the EU’s proposed green finance taxonomy is one of the most important developments in the world of sustainable finance in recent years.
However, as with any major change, questions surrounding the implications for the capital markets abound. In an article for Responsible Investor, Michael Wilkins, Global Head of Analytics and Research, Sustainable Finance, S&P Global Ratings, considers the “pain points” that the taxonomy will have to overcome if it is to be successfully implemented and effectively drive capital towards sustainable objectives.
Namely, according to Wilkins, defining what can and cannot be defined as a sustainable economic activity should be the main focus of the taxonomy’s development, if it hopes to effectively engage the broader market.
S&P Global Ratings recently announced Pablo Lutereau as its new Head of Infrastructure and Project Finance in the Europe, Middle East, and Africa (EMEA) region.
Following the news of his appointment, Mr. Lutereau said, “Infrastructure plays a critical role in EMEA’s economic growth and development in terms of social well-being. As such, I’m very pleased to start the next chapter of my S&P Global Ratings career within the dedicated EMEA team and look forward to building upon our 25-year history of assessing transactions in this market.”
Lutereau moves from S&P Global Ratings’ Buenos Aires office, where he was Head of Infrastructure & Utilities in Latin America. He will start his new role in January 2020 and will be based in Madrid.
In its recent report, S&P Global Ratings indicated that a no-deal Brexit could result in the downgrade of half of the 41 publicly rated U.K. social housing associations (HAs) in its portfolio by one notch. Particularly vulnerable are those ratings on providers that either depend on proceeds from market sales or receive extraordinary support from their related government.
There could be turbulence ahead for ADP, France’s largest airport operator. A weakening economic environment could weigh on ADP’s credit quality during a period of significant international expansion. What’s more, ADP’s possible privatisation – despite being on hold pending a referendum – carries significant risks (should a change in ownership occur).
Writing for International Airport Review, Juliana Gallo, director, Infrastructure EMEA, S&P Global Ratings, argues that the many credit strengths in the ADP’s favour could allow the group to manage its heavy capex programme and future acquisitions, while maintaining credit metrics commensurate with an ‘A+’ rating.
Market conditions for America’s independent power producers (IPPs) began to turn negative around three years ago – and they’ve barely improved since. In an article for Utility Dive, S&P Global Ratings’ senior director Aneesh Prabhu discusses how IPPs must adapt – or else face an uncomfortable future.
To continue operating against challenging market fundamentals – such as the industry’s fuel switch to natural gas, changing consumer preferences, new technologies and weakening commodity prices – IPPs have had little choice but to deleverage, diversify and, in some instances, go private. Against this backdrop, IPPs, in S&P Global Ratings’ view, cannot carry investment-grade ratings for the time being.
In his concluding remarks, Prabhu comments: “While the silver lining is that credit profiles in this segment are improving, the cloud over IPPs is yet to disperse.”
In its second ever Green Evaluation carried out in India, S&P Global Ratings has assigned an overall score of E1/90 to Adani Green Energy Ltd. Restricted Group 2’s proposed US$362.5 million green bond issuance. The E1/90 score is the highest on the Green Evaluation scale of E1-E4, and comprises a Transparency score of 89, a Governance score of 90, and a Mitigation score of 90.
“Adani’s intention to use 100% of the proceeds for solar photovoltaic power projects is the main driver of the high score,” said Cheng Jia Ong, the primary analyst of the Green Evaluation.