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Ever Thought Of A 100-Year Green Bond? French Railway Firm Is Pitching The World’s First

It seems green bonds, sometimes referred to as climate bonds, are becoming ever so popular by the day with issuance tipped to reach record levels in 2019. However a French railway firm has notched industry trend setting way up the charts by launching the world’s first 100-year green bond.

Societe Nationale des Chemins de Fer Réseau (SNCF Réseau), France’s state-owned railway network management firm, which has already raised €2.8 billion ($3.10 billion) in green bonds in 2019 alone, confirmed Friday (August 23) that it has launched its 100-year product.

The near €100 million in book value raised would be used to finance green projects meeting its eligibility criteria for improvement, maintenance and “energy optimization” of railways. Some of the funds would also be allocated to sustainability components of new route and track extensions, the company said.

In total, SNCF Réseau has so far raised €5.4 billion in green bonds, nearly doubling the figure this year. Following the latest investment round in its green bond program, the French company now ranks seventh in the global green bond issuance market.

Green bonds are typically asset-linked and backed by the issuer’s balance sheet, earmarked to be used for climate and environmental projects. According to rating agency Moody’s, issuers brought $66.6 billion of green bonds to market globally the second quarter of 2019, propelling first-half issuance to a record $117 billion up 47% on an annualized basis compared to the first six months of 2018, and compared against the 11% year-over-year growth for the same six month periods of 2017 and 2018.

However, there has been criticism over the criteria for green bonds. On paper such bonds allow firms to raise finance for low carbon and climate-friendly projects thereby offering a promising solution to those looking to go green via climate initiatives.

But there have been instances of companies using the proceeds of green bond issuance to pay of other debts. Some issuers offer green bonds targeting specific projects, but often fail to outline a clear, long-term strategic environmental goal.

For its part, SNCF Réseau’s 100-year bond and previous issuance drives strictly comply with the European Commission’s green bond standard. The French railway network operator now takes over the title of the world’s longest maturing green bond from Energias de Portugal (EDP) and Energie Baden-Wuerttemberg (EnBW) whose bond had a maturity of 60 years.

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I am a UK-based oil & gas sector analyst and business news editor/writer with over 20 years of experience in the financial and trade press. I have worked on all major media platforms – print, newswire, web and broadcast. At various points in my career, I have been an OPEC, Bank of England and UK Office for National Statistics correspondent. Over the years, I have provided wide-ranging oil & gas sector commentary, including pricing, supply scenarios, E&P infrastructure, corporations’ financials and exploration data. I am a lively commentator on ‘crude’ matters for publications and broadcasting outlets including CNBC Europe, BBC Radio, Asian and Middle Eastern networks, via my own website, Forbes and various other publications. My oil market commentary has a partial supply-side bias based on a belief that the risk premium is often given gratuitous, somewhat convenient, prominence by cheeky souls who handle quite a few paper barrels but have probably never been to a tanker terminal or the receiving end of a pipeline. Yet having done both, I pragmatically accept paper barrels [or should we say ‘e-barrels’] are not going anywhere, anytime soon!

Source: Ever Thought Of A 100-Year Green Bond? French Railway Firm Is Pitching The World’s First

10 years ago, the World Bank Treasury issued the first green bond then laid out the first blueprint for sustainable fixed income investing, transforming development finance and sparking a sustainability revolution in the capital markets. Learn about the revolution.

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Barclays’ Smoke & Mergers Will Not Deflect Tough Questions – Nils Pratley

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Chairmen, especially those embarrassed by the share price on their watch, feel obliged to examine any old merger or acquisition idea. But there are limits to what counts as credible and Barclays’ John McFarlane was seriously off-piste if he thought shareholders would be remotely interested in a corporate combination with Standard Chartered.

The idea provoked inevitable derision in the City. First, Barclays’ entire strategy for the past three years has been to reinvent itself as a US-UK “transatlantic bank”, minus its former African business. Merging with Standard, which operates almost exclusively in Asia and Africa, would be a U-turn too far. Second, regulators would probably demand substantially bigger capital buffers, thereby negating the appeal of Standard’s Asian deposit base. Third, the potential to rip out costs, banks’ usual justification for big mergers, would barely exist.

Barclays’ “exploratory conversations”, according to the FT’s report, were prompted by the perceived need to have a plan B to hand when the unsmiling agitator Edward Bramson turns rough. Bramson’s Sherborne fund has bought a 5.4% interest in Barclays and a confrontation of some form is inevitable because that is how activists justify their fees.

McFarlane and colleagues should drop their “blue sky” bumbling. Barclays’ share price, stuck around the 210p mark, is unimpressive but a panicky mega-deal could make things worse. Their thinking should be simple. If the board trusts the chief executive, Jes Staley, to grind out higher returns over time, let the strategy run. If it doesn’t, it should not have approved his plans in the first place.

Bramson’s beef is assumed to be about Barclays’ investment bank. Should the bank even be in a capital-hungry business dominated by big American firms? Bramson will probably offer a few sharp criticisms and, actually, it’s right that Barclays should be made to explain why dismantling its unreliable investment bank is supposedly too expensive to contemplate. But give the detailed rebuttal, don’t play silly games of fantasy mergers.

Most of all, remember that Bramson is merely a 5% short-termist punter who may have overreached in trying to call the tune at a large regulated bank. He should not be a source of terror.

M&S has time to save itself

It was a “historic day” for Marks & Spencer, declared the chairman, Archie Norman, and he wasn’t talking about the record £514m “adjusting item” hit to profits, which beat even last year’s £437m whack. Rather, M&S was offering the first warts-and-all assessment of its troubles for ages, Norman said.

The list of woes was certainly long: too many stores; stores in the wrong places; a website that is too slow; a distribution centre that cannot cope with peak demand; dated IT systems; an inefficient supply chain in food; and, as the chief executive, Steve Rowe, put it, a corporate culture that was “top heavy” and “inward looking”. Given that none of those items can be considered minor, you can understand why the promised turnaround is pitched as a “three-to-five-year” job.

The share price rose 5%, probably reflecting M&S’ confidence in a same-again dividend of 18.7p. The yield is 6% if you believe the annual distribution is permanently safe. That’s not the worst long-term gamble in a horrible retail sector, even if one suspects more than 100 stores will eventually have to close. M&S still has time to save itself.

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