“To monitor, advocate for and influence the impact of fixed income markets in the age of human induced climate change.”
“To monitor, advocate for and influence the impact of fixed income markets in the age of human induced climate change.”
Bond markets are generating fresh capital for coal, gas and oil development. We seek to put an end to the worst transgressions, but also push for new, innovative green investment solutions.
AFII analyses market events and trends in a fixed income climate context, and further seeks to raise awareness of the fixed income market's climate impact to outside observers.
Fixed income markets are technically complex with poor data and often lacking good models linking climate impact and trading. AFII conducts academic style research into the area.
This document categorizes and hyperlinks AFII reserach output for an easy-to-read overview. Latest update 9 June 2021. .
Deal review of some of the sustainabiliy metrics suggested for an upcoming "sustainability linked bond" (SLB) from oil sand key player Enbridge.
Keystone XL has finally been cancelled. This is a supreme opportunity to build credibility for ESG efforts for a lot of market players. If they engaged, that is.
One of the biggest methane flarers in the Permian Basin is effectively funded by Californian public pension funds. Hard to solve fiduciary equation, in our view.
Low carbon has produced stable excess returns versus traditional credit - we provide an out-of-sample, apples-for-apples examination using S&P indices based on the ECOBAR allocation model.
Key stakeholders in Dalrymple Bay, one of the world's biggest coal terminals, are arguing for a socialisation of clean up costs, seemingly in the opposition of other external claims.
Bond spreads, in contrast to equities, moved very little after a raft of actions/decisions against the fossil business model of oil majors such as Exxon, Shell, Chevron and Total.
Buy equity, buy CDS protection/short credit: engage for a leveraging up of the balance sheet but deflation of hydrocarbon capex.
Update on a recent, well-performing CDS relval trade, which should be further supported by the IEA's recents statements on the 'future' of oil and gas exploration.
When credit investors refuse to refinance coal, credit ratings drop and bond yields => cost-of-capital increases. We analyze a recent case.
Petrochemical companies play an important role in benchmark credit as well as in terms of climate mitigation. We analyse general bond exposures, as well as a recent BASF green bond coming out of the sector.
We review the decision of Citigroup to operate as a sole lead on a new bond issue for the world's biggest coal export terminal, and comment on AFR's article on NAB "peak greenwashing."
A review of National Australia Bank's (NAB) decision to finance the world's biggest coal export terminal.
Oil has posted an almost 100% rally in the past twelve months, but low carbon credit still has eked out modest outperformance.
We conclude that new €1bn loan facilities for energy conglomerate EPH constitute coal funding, and discuss details of the deal(s).
Korea National Oil Corporation has fully wiped out its equity. We analyze the credit scenario where the government lets the BlackGold oil sand project go and bets on the Blackpink COP26 trajectory instead. .
Comments on a shortly forthcoming new bond issue giving banks and investors opportunity to engage in oil sands through lending to KNOC.
hy fund JICA coal when you could just sell Japan sovereign CDS? And an update on JBIC.
We are perplexed by the choice of PFA Pension to choose to be a top international player (#2) in Province of Alberta oil sand funding.
AFII does an analysis on relative value between two oil majors under the conditions presented by rapid global warming.
Our analysis indicates that investors in certain EQT infrastructure fund(s) will have new coal mine construction exposure.
EQT building data-centers with one of the world's biggest coal players: all good?
Brookfield looks set to launch a multi-billion dollar climate fund. And a coal expansion making Dalrymple Bay into the world's biggest coal export facility. If there were a word for such strategies.
We review intensified coal mine engagements, Myanmar coup sanctions, potentially misleading carbon disclosure, and resistance to syndicate new bonds as factors to take into consideration for ADSEZ bond investors.
State Bank of India is using green credentials from multilaterals like KfW, World Bank and EIB to detract from the Carmichael mega-loan. Put a stop to it.
We discuss the nature of short selling: its dangers, its benefits, after a month of extremely interesting developments in the space.
Low carbon has produced stable excess returns versus traditional credit - we provide an out-of-sample, apples-for-apples examination using S&P indices based on the ECOBAR allocation model.
Biden's early decision to cut the Keystone XL pipeline project may have implications for Vanguard's and NBIM's large bond positions in the world's top oil sand producer, Province of Alberta.
With the announcement of the financing of the Vung An II coal plant, the AFII initiates its SSA exclusion list by putting JBIC and KEXIM on it, together with a few of AFII's earlier designated SSA climate destroyers. And we explain what SSA stands for/is.
AFII makes the case for SBI refinaning of the bank's significant USD near term maturities to be conditional on no Carmichael loan, and review parallel lending practices in order to win green bond mandates, with specific focus to SBI's 2018 green bond syndicate by HSBC among others.
The biggest USD bond funder of potential Carmichael coal lender State Bank of India has a dominant private equity owner, top-three firm Apollo Management. What does this mean for (climate concerned) end investors in Apollo funds, and/or the PE manager's engagement opportunity here?
The German coal decommissioning auction shuts 4.8GW of hard coal power, and among them the Vattenfall Moorburg 1.6GW white elephant project. Auction results and some reflections on the history of it.
A green bond market where issuers can directly finance what has been called “the world’s most insane energy project” and still claim credit for refinancing a dozen of windmills deserves to be questioned. Could we avoid it? We look into the State Bank of India potential Carmichael coal loan.
Given a potential Carmichael loan from SBI, we review who are the main banking transaction parties having exposure to such a -in our opinion- greenwash. MUFG and HSBC come out on top.
Media reports indicate that SBI is looking to provide USD650mn of fresh funding to Adani Enterprises and the Carmichael coal mine build. We think traditional bond investors, green bond investors and development banks should consider if the SBI's potential actions are in line with their climate targets.
We suggest an alternative way to get almost identical risk-return exposure but without lining the pockets of Aramco shareholder(s).
The Dalrymple coal terminal is one of the world's biggest pieces of coal infrastructure and is being put up for sale by Canadian asset manager Brookfield. There is a lot to comment on as the process enters the retail marketing stage.
In this joint piece with SSFC/Stockholm School of Economics, we argue for the relevance for and discuss the functionality of bond markets for the climate transition. Non-technical piece.
The ECB is facilitating cheap funding access for the world's premiere tar sand producer, Canadian province of Alberta, who is now using borrowed capital to subsidize its industry. Makes sense? AFII opines that is does not.
The recent AUD1mn contribution on behalf of HSBC and the Queensland government to Great Barrier Reef conservation is not in proportion to QLD's role as a top global player in coal. We call it.
Just 30 bond issuers derived by the proposed HLE2G framework and who sit in the ECB's eligible market asset list have a combined carbon footprint of 3.5 gigatonnes CO2. Decarbonisation of the ECB's exposures could be quick and straightforward (practically speaking).
Low carbon credit robustly outperform a traditional portfolio in an apples-for-apples comparison using the ECOBAR framework and S&P Indices, out-of-sample.
World's third largest coal port is being sold by Canadian real asset house Brookfield to potentially the Government of Queensland. Not a good idea, the AFII opines. At least shut the termal part of it.
Some of the world's top investor, such as Allianz and Norge's Bank Investment Management, have large exposures to Adani Ports. We present indication that that funding is reducing cost-of-capital for the Carmichael coal mega-mine. Investments should be reviewed.
CDS indices are crucial for managing credit portfolio risk. How should ESG tilted CDS indices be used in this context? We draw some conclusions from our own trading.
Vattenfall, Fortum and Engie (all government owned/controlled) are key players in the 1 Sep 2020 German coal decommissioning auction. We suggest that neither company will be making proftis in German thermal coal and thus should offer to shut capacity at €0 compensation.
We review the global top decile ESG ranking of Adani Power, a 99.7% coal based electricity company as well as recent investor losses in the company's stockk after a recent delisting announcement.
In this academic paper, we device two different ways to measure the (risk) premium between green and traditional bonds: thorugh cointegration or through realised volatility analysis.
AFII is a non-profit organization taking a bond market practitioner perspective for real climate impact. We like the buzz of a succesful trade and the P&L it brings with it. We are extremely concerned about climate change, and distrust marketing waffle around "sustainable finance".
Anthropocene Fixed Income Institute
info@anthropocenefii.org
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