Writing for Brink Asia, Ruediger Geis, Head of Trade affairs at Commerzbank AG, discusses China’s Belt and Road Initiative (BRI), and the green financing options being explored to fund aspects of it.
Geis considers China’s definition of ‘green’ – given that the country has been the leading emitter of greenhouse gases since 2007 – and the possibility that the project is catalysing a shift towards greener business in the region. China Development Bank successfully issued the first green BRI bond in 2017, supported by Commerzbank.
The article was published on Brink Asia in March 2019, and can be accessed here.
S&P Global Ratings has published its infrastructure investor outlook, ‘What Matters For Infrastructure Investors in 2019: Brexit, Populism And Country Risks’, examining the prevailing concerns among infrastructure investors in the current economy. These include: heightening policy risk, country and sovereign risk, and the overarching impact these could have on contractual and regulatory stability.
Examples include the risk of a no-deal Brexit;disagreement over funding for US infrastructure projects; the key elections scheduled within a number of emerging markets; and credit-transitioning risk in China.
S&P Global Ratings has published a report examining the contributing factors to Pacific Gas & Electric filing for bankruptcy in the aftermath of California’s devastating Camp Fire in late 2018. The report outlines how regulatory uncertainties with the state’s current utility liability legislation can essentially position a utility as the state’s reinsurer against wildfire damage, even if they are not found to have been negligent.
“We don’t believe that an electric utility is large enough, sufficiently diversified, or adequately capitalised to be a reinsurer,” says S&P Global Ratings analyst Gabe Grosberg. Without regulatory reform, S&P Global Ratings has said the ratings on California’s other utilities could fall below investment grade before the 2019 wildfire season begins.
Speaking to global trade and investment insurance forum, ExCred, James Esdaile, Managing Director, BPL Global, discusses the findings of the credit and political risk insurance broker’s latest Market Insight report.
Despite challenges facing the industry in 2018, such as uncertainty over Brexit and the UK Prudential Regulation Authority (PRA)’s consultation paper on credit risk mitigation (CP6/18), the market has shown resilience and even growth in key business lines. This, says Esdaile, speaks to “an agility within the market to adjust to both shifting risk patterns and evolving client demand.”
Leading credit and political risk insurance (CPRI) broker, BPL Global, has released the second edition of its annual Market Insight Report. The report, based on market surveys and BPL Global’s own portfolio, shows a slight decline in overall credit capacity for 2019 but significant upticks in the non-trade, non-payment public obligor, and political risk business lines.
Moreover, according to BPL Global, Spain and Germany ranked sixth and seventh respectively, in its top 10 nations for CPRI claims by value between 2016 and 2018, supporting the broker’s analysis that the CPRI market is becoming more open to covering risk located in the OECD.
The report also comments on the landscape and preparedness of the CPRI market in light of the UK’s decision to leave the European Union.
Samhällsbyggnadsbolaget i Norden AB (SBB)’s proposed green issuance has received an S&P Global Ratings Green Evaluation score of E2/64. The Swedish real estate company plans to use proceeds from the proposed SEK 500 million green bond to build energy-efficient infrastructure through redeveloping and renovating existing buildings.
The score – the second-highest on the Green Evaluation’s scale of E1 (highest) to E4 (lowest) – reflects a weighted aggregate of three criteria: Transparency, Governance, and Mitigation. While SBB’s proposed issuance achieved Transparency and Governance scores of 91 and 76 respectively, Sweden’s relatively clean grid means the net benefit is comparatively low and caps the overall score at the Mitigation score of 64.
Technology is evolving at a rapid rate, presenting banks with opportunities to enhance transaction processes and deliver real added-value to clients. In Banker Middle East, Bana Akkad Azhari, Head of Relationship Management CIS & MEA, Treasury Services, BNY Mellon, discusses the fintech appetite in the Middle East, and how collaboration between local banks, global banks and fintechs can provide banks with access to the technology initiatives they need to modernise their services.
S&P Global Ratings has announced that it has started to include ESG (environmental, social, and governance) sections within its credit rating reports on corporate entities. The new section signifies a move towards greater transparency across S&P Global Ratings’ credit analyses, particularly as market interest in ESG factors continues to increase.
The credit ratings agency has been phasing in the dedicated ESG sections, having already started with two sectors that have the greatest exposure to credit-relevant ESG factors: oil & gas and utilities. Throughout the course of the year, S&P Global Ratings expects to roll out the initiative to all major companies across every sector and smaller companies most exposed to ESG factors – representing approximately 40% of its rated corporate universe.
“We have long incorporated ESG considerations into our credit analysis,” says Michael Wilkins, Managing Director and Head of Sustainable Finance at S&P Global Ratings, “What we aim to do now is to more clearly underline to industry bodies, investors, and stakeholders how we do so.”
Fintech activity in the Middle East is building considerable momentum, with increasing demands from corporate clients and consumers for better transaction services a key factor driving this change. In Gulf Business, Bana Akkad Azhari, Head of Relationship Management CIS & MEA, Treasury Services, BNY Mellon examines how innovative technologies such as robotic process automation, artificial intelligence and blockchain could help to enhance existing processes, and allow banks to meet the ever-real need across the Middle East to deliver quick, efficient and transparent banking solutions.
Writing for African Review, Chris Ash, Managing Director at ExWorks Capital, discusses Africa’s trade finance evolution and how alternative lenders are providing a way forward for the region’s SMEs.
Despite the fact export and import opportunities in Africa are in abundance, a persisting trade finance gap continues to see SMEs underserved when it comes to accessing the necessary liquidity for growth. Chris discusses how specialist financiers are not only helping to solve this issue, but also adding value to the local economy, fomenting the creation of more jobs, more advanced infrastructure and a better quality of life for local people.
The article was published on page 16 of African Review‘s March 2019 issue. You can read the full article here.