Europe is expected to issue more Bonds in 2020 than the rest of the world combined. We only want 1/265th of the pie!! "And then there’s the matter of “greenwashing,” when a climate-friendly tag on debt doesn’t necessarily live up to the hype. One solution may be to give such securities ratings that gauge their environmental credentials. The Bank for International Settlements recommends rating the companies themselves."
Perfect choice of referee ... BIS. Does anyone believe TLG doesn't have the required PROJECT credentials to qualify??
“I’m happy to announce that Sweden is the first country in the world to obtain a ‘Dark Green’ rating from Cicero,” Financial Markets Minister Per Bolund said at a press conference in Stockholm. “This is the highest possible rating for environmental quality.”
The Swedish National Debt Office says it’s preparing to issue 20 billion kronor of green bonds in August, with proceeds linked toward “meeting Sweden’s environmental and climate objectives.” The debt agency has been working with SEB AB as special adviser on the country’s green bond framework since September."
Interestingly that article notes the slowing of green issuance due to COVID-19 funds being raised (by companies and gov'ts ... got to pay for all those welfare programs and paychecks).
Now of course TLG is neither a sovereign gov't, state owned enterprise or an investment grade rated company (by S&P or Moody's) so we have a problem with a bond issuance.
HOWEVER there is almost always a solution to every problem in finance. This one can be solved via "borrowing" the investment grade rating of a partner (in other words they guarantee the bond) and/or with bond insurance (or even Credit Default Swaps if necessary).
In summary, I will be deeply disappointed if all MS delivers is: * some form of JV where we sell down asset ownership, * some form of offtake agmt with prepayments at a large discount * some form of high yield debt (or worse still a convertible note) * some form of equity capital raising tied to a placement where warrants are "gifted".
Transitioning to a sustainable economy is becoming the defining issue of the next cycle for banks. European banks have already committed to roughly €1 trillion of sustainable financing for the economy into 2025.
Environmental, social and governance (ESG) investing is extending deeper into the market, and industries are being reconfigured in response to shifts in consumer behaviour and government policies. Morgan Stanley Research believes that the momentum on moving to a low carbon economy will be maintained as the economy recovers from the COVID-19 pandemic.
European banks lead
Morgan Stanley Research believes climate change and sustainability will be the defining trend of the next cycle for banks, just as digital disruption dominated the last. ... For banks, as allocators of capital, the Green Deal is likely to dictate the broad roadmap to manage transition and physical risk in lending portfolios, develop new products, and most importantly drive capital towards the greener businesses.
So maybe I have a high expectation here ... but just remember, every time mgmt performance and commitment is lauded in a post there is a yardstick by which we (or me) measures that ... and if MT is "the man" that many say here say he is, then he has got to MAKE MS deliver for the equity shareholder. No if's or but's about it.
TLG Price at posting:
$1.80 Sentiment: Buy Disclosure: Held
(20min delay)