GREENSAIF: a not-so-green, double-edged sword

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A private consortium led by BlackRock Real Assets is looking to the bond market to refinance/leverage their investment in Aramco's pipeline subsidiary. This short note makes the argument that the resultant bonds, if they come, should align with the parent company in terms of ESG metrics as well as index inclusion/exclusion rules.

Furthermore, we take a linguistic detour to analyse the issuer name, a combination of GREEN (commonly understood as furthering environmental purposes) and SAIF (a single-edged sword), as it does confuse us.

We believe that investors reviewing the proposed Greensaif/Aramco SPV bonds should connect any climate and ESG scoring to that of the majority owner, Saudi Aramco. The carbon footprint of any printed bonds should also be based on the parent company, as should determinations on index inclusions or exclusions.

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