Kathryn Meng Elmes
November 2022 Monthly Market Commentary
This is a series of monthly market commentaries and updates from Energetic Insurance. It was wonderful to see so many of you over the last 3-4 months across various conferences. The energy within the industry is at an all-time high! While we are all awaiting official guidance around the Inflation Reduction Act (IRA), it has not slowed the IRA from being a focal point throughout the industry. We look forward to sharing our take on the IRA and the insights we've been hearing from the market with you soon. In the meantime, we are sharing other news we have been following below.
Highlighted themes include the evolving credit risk landscape, climate news, and the banking regulatory environment. Summarizing the articles below:
Credit Risk: 1/3 of U.S. Small Businesses are unable to pay rent in full (Alignable); Rising Default Rates (Swiss Re)
Climate News: State of the Market: Renewables Procurement, Scope 3, and Carbon Credits (Energetic Insurance)
Regulatory Environment: Inflation Reduction Act Shines a Bright Light on Renewable Energy, but Guidance is Needed (Novogradac)
Over one-third of U.S. small businesses unable to pay full rent in October, survey shows (Alignable)
"In September, rent delinquency was at a six-month low, as optimism for Q4's earning potential was high and some small business owners reported increased sales. But a month later, 37% of U.S. small business owners could not pay their rent in full and on time in October." Read the full article here.
Rising defaults: "zombie firms" will be the first to fall (Swiss Re)
The rate of corporate defaults is likely to increase. In a severe recession scenario, a high yield default rate of around 15% - last seen during the global financial crisis – is possible. Read the full article here.
State of the Market: Renewables Procurement, Scope 3, and Carbon Credits (Energetic Insurance)
The market is ill-prepared to meet the insatiable demand for clean energy and other footprint-reducing solutions prompted by unprecedented SBTi, net zero, or other ESG commitments. The renewables market has shifted from a buyer’s market to a seller’s market. Credit presents a significant barrier to scaling clean energy procurement. Scope 3 is the next frontier, and credit issues are likely to be magnified greater when attempting to green supply chains. Keep reading for our key takeaways. Read the full article here.
Inflation Reduction Act Shines a Bright Light on Renewable Energy, but Guidance is Needed (Novogradac)
“There is so much more opportunity to use these credits because of the Inflation Reduction Act,” said Matt Meeker, a partner in the Dover, Ohio, office at Novogradac. “The IRA will have a big impact. We just don’t know exactly how to monetize it yet.” Read the full article here.
Energetic Insurance, Credit Insurance featured as Renewable Energy Strategy Tool (ENGIE Impact)
In a recent webinar, ENGIE Impact engaged with experts from Seminole Financial Services, Nexamp, and Energetic Insurance to discuss ways to prioritize renewable energy strategy while reducing costs. Credit insurance is featured as a means to significantly drive down buyers’ overall costs and reduce the support needed to establish creditworthiness for unrated companies, subsidiaries, or those with sub-IG credit ratings. Learn more here.
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Until Next Time
Be sure to follow our company LinkedIn page for more updates on the evolving commercial credit landscape, as well as news about Energetic. If you would like to submit any projects for a rapid price quote, you can do that here.