With keeping the accounts more or less well in the face of finance public debt, which in Catalonia is close to more than 82,000 million euros, today it is not enough. In addition to the traditional qualification, it is now necessary to comply with the environmental, social and governance criteria (ESG, in English) agreed upon within the United Nations (UN). It is not a whim but a requirement that it already imposes as essential to invest a gigantic fund like the American one Blackrock.
That is why the Generalitat chose to request such an examination from the specialized agency Vigeo-Eiris, which has belonged for a few months to Moody’s, one of the traditional giants of credit scoring. And the result has been the ‘A2’, which is the second highest of the 12 steps foreseen to measure these criteria by this agency.
They have given the Generalitat a mark of 5.5 or 55%. It sounds like a low grade or a scratch pass but it ranks seventh out of 29 regional and local governments examined by this agency. In fact, of the administrations that are above, of which Vigeo-Eiris does not offer data, none exceeds 70%. Catalonia is the first Spanish autonomy to request an evaluation of this type.
This evaluation is not only one more element in the Generalitat’s strategy in order to be financed in the markets in the future (It cannot do so since 2012 and the State is its main creditor), but to show “the commitment to sustainability criteria “, Explain Josep Maria Sanchez, General Director of Financial Policy of the Generalitat. It can also facilitate access to cheaper loans because there are financial entities that already lower the price of credit to companies or entities that, in addition to financial solvency, meet the requirements of sustainable finance, he explains.
Environment, society and governance
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According to the rating given to the Generalitat, in the social section it is the one with the best marks, with 59%, followed by governance, with 51% and the environment, with 50%. In almost all cases, it is above the average, say Government sources. The ratings are 52% in environment, 60% in human resources and human rights, 59% in community development, 52% in contracting and services, and 50% in governance.
Last summer, Fitch, one of the three agencies that evaluate Catalan finances – the others are Moody’s and DBRS – raised the Generalitat’s debt rating and removed it from the junk bond level where it had been for a decade . For the Fitch agency, the Generalitat’s long-term debt went from ‘BB’ to ‘BBB-‘. This meant going from unreliable or ‘junk’ debt such as that of countries like Georgia, Greece or Namibia to being at the level of greater reliability or investment grade, such as Italy, Croatia or India. This rating is a reference for individual and institutional investors. If this note is very high, the chances of recovering the investment are very high and the interest rate does not have to be very high. On the other hand, the worse the note, the more interest must be paid to attract investors. That is why the satisfaction they showed in the Ministry of Economy, which directs Jaume Giró.
Reference-www.elperiodico.com