Sector developments and company hires

Blue investable markets study underway
The European Commission and the EIB Group have increased their cooperation to implement a new EU Sustainable Blue Economy policy. Under the agreement, both institutions will work jointly with EU Member States to meet financing needs to reduce pollution in European seas and support investment for blue innovation and blue bioeconomy.

As such, the EIB intends to finance operations aimed at reducing discharge of chemical pollutants, nutrients, plastic waste and micro-plastics to the ocean. It will also support improved waste, wastewater and storm water management.

Both institutions will carry out a comprehensive market study and identify investable projects for pollution avoidance and reduction, as well as offer solutions to increase access to financing - including through risk reduction facilities and provision of loans, aimed at incentivising private and public financiers to provide additional liquidity to such projects.

In other news…

Appraisal declines gauged
A new KBRA report shows that US CMBS appraisals were on average 30.2% lower than valuations available at the time of securitisation, based on 1,078 commercial real estate valuations from 1 April 2020 through March 2021. The rating agency segregated the valuations into two six-month timeframes - April-September 2020 (Period 1) and October 2020-March 2021 (Period 2) - to determine any observable differences in value changes between these periods.

The report finds that valuations declined more in Period 2 (33%) compared with Period 1 (28.9%). Of the updated appraisals, 22 (2%) had value declines of greater than 80%, while 112 (10.4%) had valuation increases.

For the full 12-month period, the retail segment saw the largest average valuation decline (36.9%), led by 53 malls that experienced an average 62.3% decline. Oakdale Mall in Johnson City, New York, had the largest property valuation decline (93%).

Among the top five states with the most updated appraisals, Texas (with 120 updated appraisals) had the largest average property value decline (34.9%). The state accounted for 11% of the updated appraisal population.

Finally, although the valuation increases were not as dramatic as the declines, Whalers Village in Lahaina, Hawaii had the largest valuation increase (75.5%).

RFC issued on ESG credit factors
S&P is requesting comments on its proposed methodology articulating the principles it applies to incorporate ESG credit factors into credit ratings analysis. The agency does this through the application of sector-specific criteria when it believes the ESG factors are, or may be, relevant and material to credit ratings. The intention of the proposed methodology is to enhance the transparency of how ESG factors can influence creditworthiness.

The proposed methodology is in two sections. The first section describes ESG credit factors and how S&P captures them in its credit ratings through the application of criteria.

The second section describes general principles related to ESG credit factors. These include: how their influence on creditworthiness can differ by industry, geography and entity; the potential influence of ESG credit factors on credit ratings over time; and the relationship between creditworthiness and ESG.

Comments should be submitted by 17 June. S&P does not expect the criteria, as proposed, to affect any existing credit ratings.