Speaker 1: Broadcasting live to New York, Gloomberg eleventh, Brio to Washington,
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Speaker 1: Bloomberg nine, to the countries, US Exam General one and
Speaker 1: around the globe the Bloomberg Radio plus Japp and Bloomberg
Speaker 1: got gone. This is taking stock. I'm Kathleen Hayes on
Speaker 1: pim Fox. Time to take a look PM at green bonds.
Speaker 1: What do you think green bonds means socially responsible debtors?
Speaker 1: I guess so. All right, we're gonna be talking to
Speaker 1: Steve Liberta tour. He is managing director and fixed income
Speaker 1: portfolio manager at t I A A Creft Investment Management.
Speaker 1: That's coming up right now. Let's put to Charlie Pellett
Speaker 1: in the Bloomberg news room, Fred Bloomberg Business flat and
Speaker 1: I thank you him, Thank you, Kathleen, the dal the
Speaker 1: SMP NEZ thank all. Surging trading very close to the
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Speaker 1: Toyota is making a strategic investment in Uber Technologies and
Speaker 1: will offer auto leases to the ride hailing companies drivers.
Speaker 1: Uber declined to disclose the size of the investment. The
Speaker 1: Uber will expand its current existing program, which includes enterprise
Speaker 1: holdings by which they will lease Toyota cars. Stocks rising
Speaker 1: the most in more than two months as a surgeon
Speaker 1: home sales fueled speculation the economy can withstand higher rates
Speaker 1: amid rising bets the Federal Reserve will tighten policy this summer.
Speaker 1: David Rosenberg is chief economist at Gluskin Chef and on
Speaker 1: Bloomberg's surveillance this morning, he was asked if the Fed
Speaker 1: has a credibility Well, look, they went into this year uh,
Speaker 1: telling us that they were going to hike four times.
Speaker 1: So uh now it's basically once maybe twice. So is
Speaker 1: that a credibility problem um that they set for and
Speaker 1: it's going to be one or two? Uh. Look, if
Speaker 1: you go back, I think go back a few years
Speaker 1: to what the Fed was saying the fund strate was
Speaker 1: going to be today. Just a few years ago, you'd
Speaker 1: be talking about they would have hiked about six or
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Speaker 1: one gold down twenty three dollars zounds dropping one nine,
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Speaker 1: From the Bloomberg Newsroom, I'm Alex Steele, Charlie, and we
Speaker 1: thank you it again, recapping stocks training at our near
Speaker 1: best levels of the day, SMP up twenty nine a
Speaker 1: gain of one point four percent, stack of two percent
Speaker 1: down Industrials up to twenty nine now a gain of
Speaker 1: one point three percent. I'm Charlie Pelton. That's a Bloomberg
Speaker 1: Business flash. You're listening to taking stock with Kathleen Hayes
Speaker 1: and Pim Fox on Bloomberg Radio. Green bonds a green investing.
Speaker 1: More broadly, is it getting much more popular? Is it's
Speaker 1: something that is still a good idea without a lot
Speaker 1: of investor interests. We're gonna ask this question now from
Speaker 1: Steve Libertor. He is managing director and fixed income portfolio
Speaker 1: manager at t I A, a global asset management. He's
Speaker 1: based in Charlotte, but in our New York studio today. Steve, welcome,
Speaker 1: Thanks for having me so green bonds, What do you
Speaker 1: have to do to be a green bond? It's really
Speaker 1: a new concept or when it's really evolved over the past,
Speaker 1: you know, ten years or so to one where it's
Speaker 1: a concept where you're issuing a security that has an
Speaker 1: environmental outcome associated with a positive environmental outcome, and it
Speaker 1: continues to evolve even today. So have the example of
Speaker 1: a popular green bond right now. Sure, UM. Really the
Speaker 1: first green bond that was ever issued really wasn't even
Speaker 1: called a green bond, was called a climate awareness bond
Speaker 1: by the European Investment Bank UM. And we've really, we've
Speaker 1: really evolved since then to include green bonds from corporate
Speaker 1: issuers like Apple, Regency Centers, Bank of America, UM, Georgia Power,
Speaker 1: Southern Power Company, to a B S issuers UM Solar
Speaker 1: City has transactions UM in that space as well, so
Speaker 1: you really see municipal issuers as well have really started
Speaker 1: issuing more securities in this space. I was looking at
Speaker 1: the fund and the symbol there is t s b
Speaker 1: I X yere. To date, you've got a gain of
Speaker 1: three and a quarter percent. Congratulations, thank you. But I
Speaker 1: was looking at the holdings of the fund bond fund
Speaker 1: and I noticed you've got a lot of treasury, you
Speaker 1: have a lot of bonds from the Federal Home Loan Bank.
Speaker 1: You've also got into America Development Bank plus the National
Speaker 1: Credit Union. Are these investments really better than other bonds
Speaker 1: because intrinsically there's something about these entities that are is better.
Speaker 1: Or is it really that this is just getting more popular,
Speaker 1: so you've got to have an offering that satisfies the
Speaker 1: psychological predisposition we want to do good with our money,
Speaker 1: so we're going to buy something like this. So as
Speaker 1: it was all the value increases well. Our strategy in
Speaker 1: the way that we manage our fund is really as
Speaker 1: a core actively managed strategy benchmark to the Barquays aggregate.
Speaker 1: We just happened to employ um social criteria to our funds.
Speaker 1: So what we're trying to do is really deliver a
Speaker 1: double bottom line of excess financial return, but also delivering
Speaker 1: a return for the environment and social issues as well,
Speaker 1: more of a positive impact type of strategy. So the
Speaker 1: securities that you mentioned, UM, those are all ones that
Speaker 1: fit into the concept of investing in leaders within their
Speaker 1: respective spaces. And in core fixed income there's a real
Speaker 1: advantage we think in using environmental, social and governance criteria
Speaker 1: in managing a core fixed income fund because at the
Speaker 1: end of the day, you will get paid for UM
Speaker 1: not picking winners, but by avoiding the losers. So when
Speaker 1: you look at utilizing that kind of criteria puts you
Speaker 1: a competitive advantage. I think and fixed income over the
Speaker 1: long run broadly and fixed income in bonds right now?
Speaker 1: Where are you placing your bet in terms of maturity
Speaker 1: right A two your note probably not versus a thirty
Speaker 1: year bond. I don't know about that one either. And
Speaker 1: also in terms of like safe safe US government bonds
Speaker 1: versus credit you know, other large corporations or you know
Speaker 1: even unis. I guess yeah. We're of the view at
Speaker 1: the moment that we are in a lower for longer cycle. UM.
Speaker 1: I have been a little more I've been a little
Speaker 1: less sanguine on the state of the economy. I think
Speaker 1: that we wanted to be longer duration flat around the
Speaker 1: yield curve UM as we think that in this lower
Speaker 1: for longer period of time, low growth, low inflation, that's
Speaker 1: really the second best environment to be in spread products.
Speaker 1: So we're generally gonna be overweight and spread product. And
Speaker 1: that's also works to our strengths as a credit shop.
Speaker 1: Where we have fifty analysts at average about eleven years
Speaker 1: of experience, we have twelve traders at also oddly average
Speaker 1: about eleven years of experience UM. So it allows us
Speaker 1: to utilize our skill and expertise and evaluating securities and
Speaker 1: really digging down and getting the real valuation out of
Speaker 1: them relative to looking to say, a pure treasury in
Speaker 1: this environment, Well, you do have a lot of pure treasuries, right,
Speaker 1: I mean, it's the largest holding in the fund by
Speaker 1: about two percent. Uh. And I noticed that this goes
Speaker 1: out to what what do you make of the current
Speaker 1: yield environment in terms of taking on that kind of debt,
Speaker 1: that kind of credit for such a long period of time. Yeah,
Speaker 1: I think at this point in time where we are
Speaker 1: is I'm anticipating the FED. And I've thought this at
Speaker 1: the beginning of the year as well, when the FED
Speaker 1: was originally talking about raising four times, I thought then
Speaker 1: and still think now that maybe it would be two
Speaker 1: times at the most with downside to only once. And
Speaker 1: and with that type of environment, you look globally and
Speaker 1: the you're being capped. Domestic yields are being capped just
Speaker 1: purely by the relative valuation versus other foreign um treasure
Speaker 1: foreign government securities really makes treasuries look more relatively attractive.
Speaker 1: So for us, you know, looking at the way that
Speaker 1: the market is evolving in this lower go lower inflation
Speaker 1: type environment, taking some credit risk and looking further out
Speaker 1: the curve makes sense. And that's especially the case If
Speaker 1: the FED does insist on raising rates in here, that
Speaker 1: really should damp and off and choke off future inflation
Speaker 1: concerns when we already have very low inflation expectations. Quick
Speaker 1: final question, Just give me an example of one green
Speaker 1: bond issue that people could look at to study what
Speaker 1: it's done, who issued it, and why it informs him
Speaker 1: about the space. Sure, A great example would be um
Speaker 1: Georgia Power Company. Georgia Power is a subsidiary of Southern Company,
Speaker 1: and they recently issued a green bond, the second US
Speaker 1: utility green bond, and they actually was very unique in
Speaker 1: that they partnered with the U S Defense Department to
Speaker 1: take on unused space on at five defense bases in Georgia,
Speaker 1: put up solar panels and solar power to generate solar
Speaker 1: power there to generate enough for about forty thou homes,
Speaker 1: which is going to take out you know, roughly forty
Speaker 1: tho cars. Thank you very much for spending time with us,
Speaker 1: as Steve LiBeratur is Managing Director, Fixing Income Portfolio Manager
Speaker 1: t I A a global asset management This this Bloomberg
Speaker 1: Radio homebuilder's doing better today, banks doing better as well.
Speaker 1: A lot of this is riding on a more positive
Speaker 1: view of the US economy after a big jump in
Speaker 1: new home sales. We're gonna find out what this means
Speaker 1: for stocks down the road on Broomberg Radio.