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Energy Financing Trends Consistent with Renewables’ Growth
Equity markets appear to favor renewable-energy producers relative to their hydrocarbon counterparts. However, the relatively smaller size of many renewables projects complicates direct comparisons of bank lending to hydrocarbon and renewable entities.
Renewable Energy Projects Present Unique Lender Risks, Need for Oversight
A vigorous risk management program can mitigate potential problems facing banks and nonbank financial institutions engaged in financing these facilities—whether as agents, loan participants or direct lenders.
Residential solar power shines on, backed by securitized lending
Residential solar is a small and rapidly expanding sector, and the securitization market—the packaging of loans to investors—has been one of the most popular sources of funding for new solar installations.
Oil and gas industry shows discipline on capex, but risks remain
Oil and gas companies will likely maintain a conservative stance toward production growth, with continued focus on capital discipline and maintenance capex.
Low oil prices, local impact: Do depressed energy markets affect banks?
Oil prices have swung dramatically in recent years, shaped by geopolitical conflicts, evolving global demand and shifting energy policies.
Shift from utility to corporate financing for renewables presents risk
The increase in corporate power purchase agreements relative to utility PPAs means more opportunities for renewable energy developers, but it also presents higher counterparty and merchant tail risks for lenders involved in renewable energy project financing.
Rig count no longer a reliable bellwether for risk in oil and gas services lending
For decades, commercial lenders relied on a simple rule when evaluating credit risk in oil and gas support services: follow the U.S. rig count. But a portfolio classification of oil and gas support services now encompasses businesses with radically different risk profiles.
Oil and gas and renewable energy projects demand tailored risk management approaches
The oil and gas sector faces transition pressures and the potential for stranded assets. On the other hand, the renewable energy sector is very sensitive to legislative changes affecting tax incentives and subsidies.
Reserve-based lenders must adapt risk framework as energy producers package best collateral in asset-backed securities
Banks need to develop an understanding of how this relatively new financing structure affects their competitive positioning and portfolio risk management.
Journal Article
Costs of Oil Price Exchange-Traded Funds Diminish Usefulness
Crude oil exchange-traded funds (ETFs) are investments designed to track oil price changes. They bear unique costs of which many investors are unaware. Since the first crude oil ETF went to market in April 2006, these costs have been sizable, reducing ETF returns by 1.33 percent per month on top of the average monthly loss of 0.23 percent attributable to weak oil prices.