In an article for Gulf Business, Olivier Paul, Head of Policy at the International Chamber of Commerce Banking Commission, explains how the move towards paperless trade could help bridge the US$1.5 trillion gap between the demand and supply of trade finance.
Digitalisation will help decrease costs, increase efficiency and allow the introduction of non-banks and fintechs to the sector. These factors combined should help increase market capacity, in turn allowing for a progressive reduction in the trade finance gap.
Pierre Georges and Vittoria Ferraris, analysts at S&P Global Ratings, examined electric vehicles charging infrastructure as an emerging asset class, after 67% growth in worldwide sales of electric vehicles in 2018.
They concluded that the asset class is “unregulated, untested and unproven”, and is likely to attract more venture capital business than long-term project financing. And while European Utilities may be naturally positioned to drive investment, they could face strong competition from oil majors and automakers.
Financier Worldwide has published a commentary written by S&P Global Ratings’ Director and Sector Lead in the Infrastructure Ratings Practice in Latin America, Candela Macchi, in which she examines the expansion and resilience of the region’s infrastructure market and the discrepancies between its’ industries.
Emphasising the longevity within this asset class, Macchi predicts that although changes to regulatory frameworks will pose new challenges and unpredictable political landscapes could undermine market confidence, investors may still find comfort in the favourable conditions that traditionally characterize the infrastructure market.
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.