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Industry roundup: 15 May

BNP Paribas accelerates timeframe for complete coal exit

BNP Paribas has announced that it is expanding to all OECD countries its target to end the use of coal by its electricity-producing customers by the end of 2030. The end date for coal use by its electricity-producing customers is now 2030 for the European Union and the OECD, and the commitment to end for the rest of the world in 2040 is maintained. The bank says that the large majority of its electricity-generation customer portfolio is located in the European Union and in the other OECD countries.

BNP Paribas will not be accepting any new customers whose share of coal related revenue surpasses 25% In addition, the bank says it will continue its commitment to end, in the near future, relations with any customer developing new coal-based production capacity.

All these provisions concern both loans and financing through financial markets. After reviewing the portfolio, the bank says that the implementation of this policy will quickly lead to a reduction of about half of the number of companies producing electricity from coal among BNP Paribas’ customers. Customers who remain in the portfolio have a coal-exit trajectory compatible with the objectives of the Paris Agreement or ones that the Group believes likely to be aligned to it in the coming years. BNP Paribas’ teams will ensure this alignment through constant dialogue with customers and will take the necessary decisions as and when needed.

 

High technology is North America’s biggest corporate borrower

Analysis from John Lonski, chief economist at Moody’s Capital Markets Research has shown that, across all rating categories, the recent US$7.830 trillion of nonfinancial-corporate debt of North American nonfinancial companies rated by Moody’s was divided among US$5.994 trillion of outstanding corporate bonds, US$1.392 trillion of outstanding loans, and US$444bn of revolving credit facilities.

By industry, high technology’s US$927bn of rated obligations tops all other categories by a wide margin. Oil and gas is in a distant second place at US$745bn, while the US$675bn of the healthcare and pharmaceutical group is third.

Though high-yield issuers are more numerous than investment-grade companies, April 2020’s US$4.951 trillion of investment-grade nonfinancial-corporate credit market obligations was well above high-yield’s US$2.878 trillion. Blue-chip, investment-grade companies are not the norm. Most unrated business debt would probably receive a speculative-grade rating.

Nearly 94%, or US$4.643 trillion, of the rated investment-grade credit market instruments of North American nonfinancial companies are bonds. The remaining 6% is split between US$212bn of revolving credit facilities and US$97bn of loans. In terms of outstanding investment-grade obligations, the five largest nonfinancial industries were high-technology’s US$642bn, healthcare and pharmaceutical’s US$478bn, the oil and gas industry’s US$449bn, electric utilities’ US$441bn, and beverage, food and tobacco’s US$437bn.

 

Global Reach adds Canadian FX services

Global Reach Group, a provider of foreign exchange risk management and payment services, has acquired elements of EncoreFX’s Canadian operation. The company says this is the latest step in its international expansion plan, following its entry into Spain and the Netherlands in 2019.

Global Reach has now established a presence across Canada, with branches in eight locations, and has welcomed staff from EncoreFX Canada into the Group. The company says the acquisition ensures that Canadian customers looking for foreign exchange (FX) services and hedging solutions will continue to have a wide choice of providers.

 

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