July 25, 2013 by apicomely
At the AshokaU Exchange in February 2013, we met Ted Levinson, Director of Lending atRSF Social Finance, and convinced him to give us the opportunity to gain experience in this innovative field. Impressed by our enthusiasm and commitment, he put us in touch with a nonprofit that benefited from impact investments: DC Central Kitchen. DC Central Kitchen is a Washington, D.C.-based nonprofit that provides culinary training to at-risk individuals using local recycled food in order to provide healthy school lunches for grade school students. Due to their staggering growth, they requested a loan from RSF to help them invest in better equipment. RSF gave us the responsibility to perform financial analysis and draft a credit memo for evaluation.
Old-Fashioned Regulators Miss What’s New in Finance
Since the start of 2007, the EIB has loaned around 11 billion euros ($14.5 billion) to fossil fuel-fired plants, most of it to gas rather than coal, a fraction of its total lending for power of 83 billion euros. The EIB decision follows moves by other multilateral financial institutions such as the Washington-headquartered World Bank to fund coal-fired power stations only in “rare circumstances”. RECONSIDERING COAL The pullback by multilateral banks comes as more private sector lenders are already reconsidering their exposure to coal-related assets. “New coal power plants are no longer viewed as the low-risk, low-cost option for electricity, so we would expect that private finance for coal will stop flowing,” said Athena Ronquillo-Ballesteros of Washington-based think tank the World Resources Institute (WRI).
UPDATE 1-EU finance arm curbs loans to coal-fired power plants
Securitization — the bundling of loans into tradable assets that can be pledged as collateral — cant be uninvented. Even if that were possible it might not be desirable: The modern short-term funding market means cheaper and more accessible finance, which in normal times is a good thing. But, as weve learned, the costs can be colossal when things go wrong. The risks have to be reduced.