The great carbon arbitrage, going short (retiring) on coal and going long (investing) on renewables (also known as an "asset for fuel swap") is positive NPV. The present value of the social benefits of avoided emissions is higher than the sum of the present value of the foregone cash flows of phasing out coal and the PV of the costs of replacing coal by renewable generation. The arbitrage is illustrated using a generic coal power plant in the U.S. energy market, retired 20 years before the end of its engineering life. The early retirement raises the issue of the financing of a stranded asset. The case shows how a green bond can facilitate the arbitrage by reducing the phase-out costs for the different parties involved (investors and ratepayers).
In April 2010, infrastructure fund Njord Gas Infrastructure AS bought ExxonMobil's 9.428% stake in Norwegian gas pipelines Gassled. Njord was interested in Gassled's steady returns and Norway's regulatory/political consistency and transparency. Once built, pipelines were seen as a relatively safe investment as tariffs to transport natural gas were usually fixed for many years (whether prices rose or fell) and bookings were made years in advance. Others followed Njord's lead in 2011 and 2012 to buy into Gassled - four infrastructure funds owned 44% of Gassled after the acquisitions. It came as a shock when a year after the transactions went through, the Norwegian government decided that returns were too high and decided to cut the tariffs charged by Gassled to transport gas by 90%.
In September 2014, the Indiana Toll Road (ITR) in the US Mid-west, privatized as a 75-year concession at an impressive price of US$3.8 billion only nine years earlier, filed for Chapter 11 bankruptcy , having chalked up US$6.3 billion of debt. In the subsequent sell-off the ITR managed to attract an even bigger bid than before - of US$5.72 billion.
The case discusses the public-private partnership to build the New Royal Adelaide Hospital (NRAH) (replacing the outdated Royal Adelaide Hospital) at a cost of A$1.7 billion in 2009. The 35-year concession was eventually awarded to a consortium, the South Australian Health Partnership (SAHP), and the government agreed to make an annual service payment to the consortium of A$397 million a year once the hospital was completed in 2016. Rising state debt in the wake of the global financial crisis led to protests by opposition politicians when the cost of the NRAH was said to have ballooned.
The case discusses the public-private partnership to build the New Royal Adelaide Hospital (NRAH) (replacing the outdated Royal Adelaide Hospital) at a cost of A$1.7 billion in 2009. The 35-year concession was eventually awarded to a consortium, the South Australian Health Partnership (SAHP), and the government agreed to make an annual service payment to the consortium of A$397 million a year once the hospital was completed in 2016. Rising state debt in the wake of the global financial crisis led to protests by opposition politicians when the cost of the NRAH was said to have ballooned.
In 2013, the long-delayed IPO of the Bangkok Mass Transit System Public Co. Ltd. (BTSC) took place, but in an unusually complex form. Instead of selling the shares of the company that owned the elevated railway concession, what was offered were investment units in Thailand's first publicly listed infrastructure mutual fund: the BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF). Proceeds from the IPO were used to acquire from BTSC the rights to the net farebox revenue generated from the railway. The investment exposed investors not only to the operating risk of the railway but to other types such as political risk.
In 2013, the long-delayed IPO of the Bangkok Mass Transit System Public Co. Ltd. (BTSC) took place, but in an unusually complex form. Instead of selling the shares of the company that owned the elevated railway concession, what was offered were investment units in Thailand's first publicly listed infrastructure mutual fund: the BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF). Proceeds from the IPO were used to acquire from BTSC the rights to the net farebox revenue generated from the railway. The investment exposed investors not only to the operating risk of the railway but to other types such as political risk.
BrisConnections won the bid to construct the Airport Link toll road under a BOOT (Build, Own, Operate and Transfer) PPP model just as the global financial crisis took hold in 2008. Soon the project would take its place among a string of Australian toll road project failures.
In September 2010, Dürr AG issued a corporate bond without the use of underwriters or rating agencies via a new bond issuance platform developed by Boerse Stuttgart. This reflected a growing trend among European corporations to tap capital markets instead of bank debt to secure debt financing.
A consortium made up of Macquarie Infrastructure Group (MIG) and Cintra Concessiones de Infraestructuras de Transporte wins the concession for the Indiana Toll Road at a bid price of US$3.8 billion in January 2006. Market observers think the amount is too high, but MIG is confident the asset is worth the price.
Aquasure - a consortium formed by Macquarie, Degremont and Thiess - won the concession to finance, build, maintain and operate the A$5.72 billion Victorian Desalination plant under a public-private partnership initiative known as Partnerships Victoria. Financing took place during the period of the global financial crisis and there was a subsequent political backlash.
"Microfinance investment opportunities have been well received by Credit Suisse clients seeking socially responsible investments. They provide a ""double bottom line"": a positive financial return (despite the global financial crisis), and a social impact by offering first-time access to financial services to the poor. From $5 million in 2003, total assets under management in microfinance at Credit Suisse reached $1 billion by 2009, and untapped demand is estimated at $300 billion. The firm has positioned itself as a link between the TOP of the wealth pyramid (its clients) and the BOP (base of the pyramid, the poor), but as microfinance comes under fierce criticism for over-indebting the poor, and with a decline in growth, performance and portfolio quality, Credit Suisse must consider its future engagement in this sector of the emerging markets. "
A description of the events leading to the collapse of China Aviation Oil under US$550m of derivative trading losses and subsequent attempts to identify the causes and save the company from liquidation via a debt restructuring scheme of arrangement.