Insight

Invesco leads ESG initiative in bank loans

Invesco leads ESG initiative in bank loans
Invesco has independently rated over 700 corporate issuers globally against ESG criteria.
Key takeaways
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Increasing focus on Environmental, Social, and Governance (ESG) criteria for investments.

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As bank loans are private, only a small pool of the investable universe is rated by external ESG rating providers.

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Invesco has independently rated over 700 corporate issuers globally from an ESG perspective to provide ESG-managed bank loan portfolios.

Invesco manages approximately $41.1 billion* in senior secured bank loans for institutional, retail and high net worth clients globally. More and more of these clients are focused on Environmental, Social, and Governance (ESG) criteria for investments and have asked for ESG-managed bank loan portfolios.

As bank loans are private, only a small pool of the investable universe is rated by external ESG rating providers. In order to develop an ESG product that would work for its clients, Invesco has developed a proprietary framework for rating each issuer. Our collaborative approach to ESG helps investors to better understand Invesco’s ESG considerations. Invesco’s bank loans analysts have conducted extensive due diligence reviews and engagement with issuers’ management teams and have compiled proprietary ESG ratings on more than 700 issuers. In addition, Invesco’s bank loans team now works closely with other groups within Invesco on the further development of Invesco’s ESG framework and process.

Since its launch in July, the US Senior Loan ESG Fund has reached a size of USD 628.05 million (as per 31 December 2019).

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Watch the podcast with Invesco’s Kevin Petrovcik & Glen Yelton. Hosted by Brian Levitt.

Asset classes

  • G (thes.) USD LU1980177106
  • GX (mtl. distr.) USD LU1980177288
  • GH (EUR-hgd) LU1980177528
  • GHX (EUR-hgd, mtl. distr.) LU1980177874
  • H USD LU1980177957
  • HX (mtl. distr.) USD LU1980178096
  • HH (EUR-hgd) LU1980178336
  • HHX (EUR-hgd, mtl. distr.) LU1980178500

Investment objective and strategy

The Fund seeks to generate high current income while protecting capital and integrating ESG criteria (Environment, Social, Governance).

Minimum investment

  • Minimum initial investment (H): 160,000 USD
  • Minimum initial investment (G): $ 10 million (or equivalent in other currency)

Footnotes

  • *Source: Invesco as at 30.11.2019

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. The strategy is particularly dependent on the analytical abilities of its investment manager on senior loans. Many senior loans are illiquid, meaning that the investors may not be able to sell them quickly at a fair price and/or that the redemptions may be delayed due to illiquidity of the senior loans. The market for illiquid securities is more volatile than the market for liquid securities. The market for senior loans could be disrupted in the event of an economic downturn or a substantial increase or decrease in interest rates. Senior loans, like most other debt obligations, are subject to the risk of default. The market for senior loans remains less developed in Europe than in the U.S. Accordingly, and despite the development of this market in Europe, the European Senior Loans secondary market is usually not considered as liquid as in the U.S.

Important information

  • Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.