Partner Insight: The challenge of selecting sustainable debt

clock • 6 min read
Partner Insight: The challenge of selecting sustainable debt

We asked BlueBay’s Tom Moulds, senior portfolio manager, how he identifies investments for BlueBay’s new impact-aligned debt strategy

We asked BlueBay's Tom Moulds, senior portfolio manager, how he identifies investments for BlueBay's new impact-aligned debt strategy

How do you select opportunities around your seven sustainable themes, which include such topics as enabling a circular economy and promoting clean and safe energy?

We go through a particularly meticulous process for this impact-aligned strategy. The first part, when we started building the strategy, was to screen the whole universe of potential investments.

We screened out issuers we knew we could not buy due to our criteria. Then we used programming languages to write routines to interrogate data, mainly from Bloomberg, to create a potential universe of issuers that fit our sustainability themes. Our data science approach is something that, we see, relatively few other sustainable investors do, as yet.

What happens next?

Then there's an iterative process of narrowing down that universe through a combination of looking at things more carefully and bringing in the analysts. We've educated our analysts on our sustainability criteria to make sure they really understand what we're looking for.

So it's a mix of data science and human judgment?

I guess the first stage of building a potential universe is almost like a quantitative process. But, yes, then we're working with the ESG team and the bottom-up credit analysts - there are around 30 at BlueBay - to interrogate those issuers to see if they really do meet our qualifying criteria for the impact fund.

Is teamwork critical to this kind of multi-theme global strategy?

Everybody has got a stake in this strategy, from portfolio management, to analysts, to the ESG team! It may be the first strategy at BlueBay to have such an intense degree of collaboration. Personally, I've found it fascinating to deal with so many analysts from different teams and collect so much information from different areas.

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