This Week in ESG and Impact Investing

  In the backdrop of the IMF/World Bank Spring Meetings, the Brookings Africa Growth Initiative (AGI), AfriCatalyst and the UNDP’s Africa Bureau hosted a high level panel discussion about the impact of credit ratings on African development. Panelists included Ghana’s Minister of Finance Ofori-Atta, Senegal’s Minister of Economic Planning Oulimata Sarr and the President of the Eastern and Southern Africa Trade and Development Bank Admassu Tadesse. At the IMF/World Bank Meeting in 2017 , Economist and Creative Investment Research CEO William Michael Cunningham raised concerns about discrimination and misadjusted risk attitudes towards the continent. It is encouraging to see that this conversation is finally receiving the attention it deserves. The panelists agreed that there is a need for reform in credit rating agencies' relationship with African sovereign states. They also highlighted the severe consequences of downgrades in credit ratings on African countries, hindering much-...

Recently, California State Treasurer Bill Lockyer "has been leading a national effort to persuade the rating agencies to change the way they rate municipal bonds. Munis are held to a much higher standard than corporate bonds, as the rating agencies' own default studies demonstrate. This unjustifiable system has cost taxpayers billions of dollars." This "also helped trigger (a) meltdown..when several (municipal) bond insurers suffered downgrades below the minimum ratings required for money market eligibility." See: States and Cities Start Rebelling on Bond Ratings. Also see: http://www.sec.gov/rules/proposed/s70405/wcunningham9442.pdf "Three weeks ago, the Treasurer took the lead in writing a letter to the rating agencies requesting that they change the way they rate municipal bonds. The letter was signed or endorsed by 13 state treasurers, as well as four other state and local municipal issuers across the country." Other institutional investors..o...

Following a reduction in subprime market exposure, ratings for the holding company that owns one of the largest Hispanic banks were upgraded today. Moody's "changed the rating outlook on Popular Inc. (BPOP) and its units to stable from negative. The company is rated A3 for senior debt and its unit, Banco Popular de Puerto Rico, is rated C+ for bank financial strength and A2 for deposits.The outlook change follows Popular's sale of a significant portion of its Equity One mortgage and consumer loan portfolio to American International Group Inc. The outlook was downgraded to negative Dec. 24, 2007. Moody's said the transaction will reduce the company's exposure to U.S. subprime mortgages and significantly strengthen its holding company liquidity position since Popular has largely financed its U.S. consumer finance business with short- and medium-term wholesale borrowings at the parent company level." Of course, we still have issues with AIG, Popular, and the rati...