China still looks scary | opinion
investing pitches and research are shot through with vague, incoherent and contradictory claims. Lately, more and more people are making similar complaints. The message, however, does not seem to have reached the sellside. A recent report from Bank of America, focusing on ESG-labelled bonds in Europe, contains a lot of the usual static .
But from investors’ point of view, surely the small greenium is good, because a company’s cost of capital is investors’ expected return. Maybe the thrust of the report should have been, “Yay, you can buy bonds that line up with your values while only giving up a sliver of expected return.” But that does not seem to be the point, here or in any other report I’ve ever seen.
Maybe the authors have something else in mind: that the equity of companies with higher debt costs will tend to perform poorly. In that general vein, they point out that This is partly because marginal buyers like central banks and treasuries tend to take a more buy and hold stance to investing. They are also less likely to be forced sellers in a downturn. Labelled bonds have been more limited in volumes, so there is less incentive to sell given uncertain ability to replace them.
Belgique Dernières Nouvelles, Belgique Actualités
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