WEBVTT - TIAA's Liberatore on Growing Interest in 'Green' Bonds (Audio)

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<v Speaker 1>Broadcasting live to New York, Gloomberg eleventh, Brio to Washington,

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<v Speaker 1>d C. Bloomber to Boston, Bloomberg twelve hundred to San Francisco,

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<v Speaker 1>Bloomberg nine, to the countries, US Exam General one and

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<v Speaker 1>around the globe the Bloomberg Radio plus Japp and Bloomberg

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<v Speaker 1>got gone. This is taking stock. I'm Kathleen Hayes on

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<v Speaker 1>pim Fox. Time to take a look PM at green bonds.

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<v Speaker 1>What do you think green bonds means socially responsible debtors?

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<v Speaker 1>I guess so. All right, we're gonna be talking to

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<v Speaker 1>Steve Liberta tour. He is managing director and fixed income

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<v Speaker 1>portfolio manager at t I A A Creft Investment Management.

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<v Speaker 1>That's coming up right now. Let's put to Charlie Pellett

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<v Speaker 1>in the Bloomberg news room, Fred Bloomberg Business flat and

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<v Speaker 1>I thank you him, Thank you, Kathleen, the dal the

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<v Speaker 1>SMP NEZ thank all. Surging trading very close to the

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<v Speaker 1>best level of the day. And this update is brought

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<v Speaker 1>to you by b in why Melon introducing Assets Strategy View,

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<v Speaker 1>helping fund managers gain insight into where asset owners are

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<v Speaker 1>investing and how their strategies are changing. Visit the n

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<v Speaker 1>why melon dot com to learn about asset strategy view.

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<v Speaker 1>Toyota is making a strategic investment in Uber Technologies and

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<v Speaker 1>will offer auto leases to the ride hailing companies drivers.

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<v Speaker 1>Uber declined to disclose the size of the investment. The

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<v Speaker 1>Uber will expand its current existing program, which includes enterprise

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<v Speaker 1>holdings by which they will lease Toyota cars. Stocks rising

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<v Speaker 1>the most in more than two months as a surgeon

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<v Speaker 1>home sales fueled speculation the economy can withstand higher rates

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<v Speaker 1>amid rising bets the Federal Reserve will tighten policy this summer.

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<v Speaker 1>David Rosenberg is chief economist at Gluskin Chef and on

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<v Speaker 1>Bloomberg's surveillance this morning, he was asked if the Fed

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<v Speaker 1>has a credibility Well, look, they went into this year uh,

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<v Speaker 1>telling us that they were going to hike four times.

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<v Speaker 1>So uh now it's basically once maybe twice. So is

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<v Speaker 1>that a credibility problem um that they set for and

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<v Speaker 1>it's going to be one or two? Uh. Look, if

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<v Speaker 1>you go back, I think go back a few years

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<v Speaker 1>to what the Fed was saying the fund strate was

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<v Speaker 1>going to be today. Just a few years ago, you'd

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<v Speaker 1>be talking about they would have hiked about six or

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<v Speaker 1>eight times. The ten year down eight thirty seconds, zeal

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<v Speaker 1>one gold down twenty three dollars zounds dropping one nine,

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<v Speaker 1>three two on Wall Street. Now, let's take a look

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<v Speaker 1>at other news from around the world. Thank you, Charlie

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<v Speaker 1>from the Bloomberg Newsroom. I'm Alex Steele. This news update

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<v Speaker 1>is brought to you by the jeep Grand Cherokee, the

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<v Speaker 1>Governor Terry mccaliffe is addressing reports that he's being investigated

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<v Speaker 1>for alleged illegal campaign contributions. Federal investigators are reportedly looking

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<v Speaker 1>into whether Governor mccalliffe accepted a contribution from a Chinese

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<v Speaker 1>businessman Wang when Liang. Federal law forbids foreigners from contributing

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<v Speaker 1>to US campaigns, but mccalliffe says he's confident he's done

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<v Speaker 1>nothing wrong. I'm not sure I've ever even met the gentleman,

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<v Speaker 1>and who went back and checked in our lawyers. The

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<v Speaker 1>campaign said this man had been fully vetted mccalliffe says

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<v Speaker 1>this donor has held a green card for nearly a

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<v Speaker 1>decade and is a legitimate donor. He also says he'll

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<v Speaker 1>fully cooperate with authorities. Nancy Lions, Bloomberg Radio. A judge

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<v Speaker 1>says there's enough evidence to try Bill cosbyond sexual assault charges.

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<v Speaker 1>The criminal case against him hinges on a decade old

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<v Speaker 1>police report in which a woman said the comedian gave

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<v Speaker 1>her three blue pills that put her in a stupor

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<v Speaker 1>and left her unable to stop his advances and engineers

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<v Speaker 1>operating trains on the nation's the third largest commuter railroad

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<v Speaker 1>even though his driver's license has been suspended for ten

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<v Speaker 1>years because of a history of driving well intoxicated. W

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<v Speaker 1>ABC TV reports that New Jersey transit engineer Thomas Burchard's

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<v Speaker 1>license was suspended in two thousand seven for a decade,

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<v Speaker 1>and he has someone pick him up from work because

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<v Speaker 1>he can't legally drive a car. Global News twenty four

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<v Speaker 1>From the Bloomberg Newsroom, I'm Alex Steele, Charlie, and we

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<v Speaker 1>thank you it again, recapping stocks training at our near

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<v Speaker 1>best levels of the day, SMP up twenty nine a

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<v Speaker 1>gain of one point four percent, stack of two percent

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<v Speaker 1>down Industrials up to twenty nine now a gain of

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<v Speaker 1>one point three percent. I'm Charlie Pelton. That's a Bloomberg

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<v Speaker 1>Business flash. You're listening to taking stock with Kathleen Hayes

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<v Speaker 1>and Pim Fox on Bloomberg Radio. Green bonds a green investing.

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<v Speaker 1>More broadly, is it getting much more popular? Is it's

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<v Speaker 1>something that is still a good idea without a lot

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<v Speaker 1>of investor interests. We're gonna ask this question now from

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<v Speaker 1>Steve Libertor. He is managing director and fixed income portfolio

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<v Speaker 1>manager at t I A, a global asset management. He's

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<v Speaker 1>based in Charlotte, but in our New York studio today. Steve, welcome,

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<v Speaker 1>Thanks for having me so green bonds, What do you

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<v Speaker 1>have to do to be a green bond? It's really

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<v Speaker 1>a new concept or when it's really evolved over the past,

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<v Speaker 1>you know, ten years or so to one where it's

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<v Speaker 1>a concept where you're issuing a security that has an

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<v Speaker 1>environmental outcome associated with a positive environmental outcome, and it

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<v Speaker 1>continues to evolve even today. So have the example of

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<v Speaker 1>a popular green bond right now. Sure, UM. Really the

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<v Speaker 1>first green bond that was ever issued really wasn't even

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<v Speaker 1>called a green bond, was called a climate awareness bond

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<v Speaker 1>by the European Investment Bank UM. And we've really, we've

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<v Speaker 1>really evolved since then to include green bonds from corporate

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<v Speaker 1>issuers like Apple, Regency Centers, Bank of America, UM, Georgia Power,

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<v Speaker 1>Southern Power Company, to a B S issuers UM Solar

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<v Speaker 1>City has transactions UM in that space as well, so

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<v Speaker 1>you really see municipal issuers as well have really started

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<v Speaker 1>issuing more securities in this space. I was looking at

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<v Speaker 1>the fund and the symbol there is t s b

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<v Speaker 1>I X yere. To date, you've got a gain of

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<v Speaker 1>three and a quarter percent. Congratulations, thank you. But I

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<v Speaker 1>was looking at the holdings of the fund bond fund

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<v Speaker 1>and I noticed you've got a lot of treasury, you

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<v Speaker 1>have a lot of bonds from the Federal Home Loan Bank.

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<v Speaker 1>You've also got into America Development Bank plus the National

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<v Speaker 1>Credit Union. Are these investments really better than other bonds

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<v Speaker 1>because intrinsically there's something about these entities that are is better.

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<v Speaker 1>Or is it really that this is just getting more popular,

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<v Speaker 1>so you've got to have an offering that satisfies the

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<v Speaker 1>psychological predisposition we want to do good with our money,

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<v Speaker 1>so we're going to buy something like this. So as

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<v Speaker 1>it was all the value increases well. Our strategy in

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<v Speaker 1>the way that we manage our fund is really as

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<v Speaker 1>a core actively managed strategy benchmark to the Barquays aggregate.

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<v Speaker 1>We just happened to employ um social criteria to our funds.

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<v Speaker 1>So what we're trying to do is really deliver a

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<v Speaker 1>double bottom line of excess financial return, but also delivering

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<v Speaker 1>a return for the environment and social issues as well,

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<v Speaker 1>more of a positive impact type of strategy. So the

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<v Speaker 1>securities that you mentioned, UM, those are all ones that

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<v Speaker 1>fit into the concept of investing in leaders within their

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<v Speaker 1>respective spaces. And in core fixed income there's a real

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<v Speaker 1>advantage we think in using environmental, social and governance criteria

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<v Speaker 1>in managing a core fixed income fund because at the

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<v Speaker 1>end of the day, you will get paid for UM

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<v Speaker 1>not picking winners, but by avoiding the losers. So when

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<v Speaker 1>you look at utilizing that kind of criteria puts you

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<v Speaker 1>a competitive advantage. I think and fixed income over the

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<v Speaker 1>long run broadly and fixed income in bonds right now?

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<v Speaker 1>Where are you placing your bet in terms of maturity

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<v Speaker 1>right A two your note probably not versus a thirty

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<v Speaker 1>year bond. I don't know about that one either. And

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<v Speaker 1>also in terms of like safe safe US government bonds

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<v Speaker 1>versus credit you know, other large corporations or you know

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<v Speaker 1>even unis. I guess yeah. We're of the view at

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<v Speaker 1>the moment that we are in a lower for longer cycle. UM.

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<v Speaker 1>I have been a little more I've been a little

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<v Speaker 1>less sanguine on the state of the economy. I think

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<v Speaker 1>that we wanted to be longer duration flat around the

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<v Speaker 1>yield curve UM as we think that in this lower

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<v Speaker 1>for longer period of time, low growth, low inflation, that's

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<v Speaker 1>really the second best environment to be in spread products.

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<v Speaker 1>So we're generally gonna be overweight and spread product. And

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<v Speaker 1>that's also works to our strengths as a credit shop.

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<v Speaker 1>Where we have fifty analysts at average about eleven years

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<v Speaker 1>of experience, we have twelve traders at also oddly average

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<v Speaker 1>about eleven years of experience UM. So it allows us

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<v Speaker 1>to utilize our skill and expertise and evaluating securities and

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<v Speaker 1>really digging down and getting the real valuation out of

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<v Speaker 1>them relative to looking to say, a pure treasury in

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<v Speaker 1>this environment, Well, you do have a lot of pure treasuries, right,

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<v Speaker 1>I mean, it's the largest holding in the fund by

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<v Speaker 1>about two percent. Uh. And I noticed that this goes

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<v Speaker 1>out to what what do you make of the current

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<v Speaker 1>yield environment in terms of taking on that kind of debt,

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<v Speaker 1>that kind of credit for such a long period of time. Yeah,

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<v Speaker 1>I think at this point in time where we are

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<v Speaker 1>is I'm anticipating the FED. And I've thought this at

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<v Speaker 1>the beginning of the year as well, when the FED

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<v Speaker 1>was originally talking about raising four times, I thought then

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<v Speaker 1>and still think now that maybe it would be two

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<v Speaker 1>times at the most with downside to only once. And

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<v Speaker 1>and with that type of environment, you look globally and

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<v Speaker 1>the you're being capped. Domestic yields are being capped just

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<v Speaker 1>purely by the relative valuation versus other foreign um treasure

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<v Speaker 1>foreign government securities really makes treasuries look more relatively attractive.

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<v Speaker 1>So for us, you know, looking at the way that

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<v Speaker 1>the market is evolving in this lower go lower inflation

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<v Speaker 1>type environment, taking some credit risk and looking further out

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<v Speaker 1>the curve makes sense. And that's especially the case If

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<v Speaker 1>the FED does insist on raising rates in here, that

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<v Speaker 1>really should damp and off and choke off future inflation

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<v Speaker 1>concerns when we already have very low inflation expectations. Quick

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<v Speaker 1>final question, Just give me an example of one green

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<v Speaker 1>bond issue that people could look at to study what

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<v Speaker 1>it's done, who issued it, and why it informs him

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<v Speaker 1>about the space. Sure, A great example would be um

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<v Speaker 1>Georgia Power Company. Georgia Power is a subsidiary of Southern Company,

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<v Speaker 1>and they recently issued a green bond, the second US

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<v Speaker 1>utility green bond, and they actually was very unique in

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<v Speaker 1>that they partnered with the U S Defense Department to

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<v Speaker 1>take on unused space on at five defense bases in Georgia,

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<v Speaker 1>put up solar panels and solar power to generate solar

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<v Speaker 1>power there to generate enough for about forty thou homes,

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<v Speaker 1>which is going to take out you know, roughly forty

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<v Speaker 1>tho cars. Thank you very much for spending time with us,

0:10:49.320 --> 0:10:53.640
<v Speaker 1>as Steve LiBeratur is Managing Director, Fixing Income Portfolio Manager

0:10:53.760 --> 0:10:57.360
<v Speaker 1>t I A a global asset management This this Bloomberg

0:10:57.480 --> 0:11:04.040
<v Speaker 1>Radio homebuilder's doing better today, banks doing better as well.

0:11:04.080 --> 0:11:06.679
<v Speaker 1>A lot of this is riding on a more positive

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<v Speaker 1>view of the US economy after a big jump in

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<v Speaker 1>new home sales. We're gonna find out what this means

0:11:11.559 --> 0:11:13.480
<v Speaker 1>for stocks down the road on Broomberg Radio.