Bank of America Corp (NYSE:BAC) has pledged to increase the company’s current environmental business initiative from $50 billion to $125 billion in low-carbon business by 2025 through lending, investing, capital raising, advisory services and developing financing solutions for clients around the world.
Today’s announcement will be highlighted at the White House’s American Business Act on Climate Pledge event, which recognizes corporations for their support of action to address climate change. The event will bring together executives from various industries as they pledge their support of an agreement in advance of the climate change talks in Paris scheduled for later this year. The company is represented by Purna Saggurti, Bank of America Merrill Lynch chairman of Global Corporate and Investment Banking.
The company initiative and commitment focus on energy efficiency, renewable energy and transportation, in addition to addressing other important areas like water conservation, land use and waste. This expanded second commitment builds on the company’s initial environmental business initiative established in 2007 and fulfilled in 2013, four years ahead of schedule.
“We are putting our financial capital, our intellectual capital, and the strength of our partnerships to work to help create a better future for all of us,” said Brian Moynihan, chief executive officer, Bank of America.
“We will continue to work with partners around the globe to develop innovative and scalable solutions that attract new investors and additional capital to clean energy and low-carbon infrastructure opportunities,” said Saggurti.
“Since making its original environmental business commitment in 2007, Bank of America has consistently been among the leaders in every branch of clean energy finance we track,” said Michael Liebreich, founder and chairman of the Advisory Board, Bloomberg New Energy Finance. “This new commitment means Bank of America is again setting the pace. To be considered a leading provider of financial services, in anything from energy to real estate, it’s crucial to be focused on funding low-carbon solutions, and Bank of America’s new commitment is a very significant statement.”
Bank of America has provided more than $39 billion in financing for low-carbon activities since 2007, including $12 billion in 2014 alone, of which:
- Forty percent went to renewable energies – solar, wind, hydro, geothermal, advanced biofuels or mixed portfolios.
- Thirty-three percent went to financing energy efficiency.
In the past 12 months, Bank of America has deployed several innovative capital markets solutions designed to accelerate the funding of low-carbon projects, focusing in particular on developing the green bond market and building out its new Catalytic Finance Initiative.
Bank of America has played a leading role in the development of the rapidly expanding green bond market, issuing the first benchmark-sized corporate green bond in 2013 – a $500 million offering – followed by a second green bond for $600 million in the spring of 2015. According to Bloomberg New Energy Finance, Bank of America was the No. 1 underwriter of green bond issuances in 2014.
The company is also committed to attracting a wider array of capital to clean energy investments while delivering low-risk, solid yield opportunities for investors though the bank’s Catalytic Finance Initiative. Examples of initial projects under the initiative include:
- Global Alliance for Clean Cookstoves: In November 2014, Bank of America announced a partnership with the Global Alliance for Clean Cookstoves and other commercial and development finance institutions to raise $100 million to help provide clean cooking solutions to millions of households in the developing world. Advancing clean cookstove technology helps improve the health of women and children, protects the environment by reducing carbon emissions and spurs economic growth.
- Energía Eólica SA (EESA): Bank of America was a joint bookrunner for the first green bond out of Latin America, an offering of $204 million in senior secured green notes by EESA, a ContourGlobal subsidiary. Proceeds from the green project bond directly support EESA’s two separate wind farms in Talara and Cupisnique, Peru that became operational in September 2014 with an installed capacity of 114.04 MW. This green offering is expected to be the first of a new asset class that will help finance environmentally beneficial infrastructure in Latin America. It was recently named “Green Bond of the Year” by Environmental Finance magazine. (Original Source)
Shares of Bank of America closed last Friday at $17.90. BAC has a 1-year high of $18.48 and a 1-year low of $14.84. The stock’s 50-day moving average is $17.39 and its 200-day moving average is $16.34.
On the ratings front, Bank of America has been the subject of a number of recent research reports. In a report issued on July 23, Morgan Stanley analyst Betsy Graseck maintained a Buy rating on BAC. Separately, on the same day, CLSA’s Mike Mayo maintained a Sell rating on the stock and has a price target of $16.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Betsy Graseck and Mike Mayo have a total average return of 8.8% and -1.9% respectively. Graseck has a success rate of 66.7% and is ranked #767 out of 3712 analysts, while Mayo has a success rate of 62.5% and is ranked #2940.
Overall, 2 research analysts have assigned a Hold rating and 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $18.90 which is 5.6% above where the stock closed last Friday.