You can do this with anything! Absolutely anything:
- Horrible Coal Inc. wants to raise money.
- It sets up a special purpose vehicle, Hypertechnical Investments Ltd.
- Horrible Coal issues bonds to Hypertechnical Investments.
- Hypertechnical issues its own bonds to ESG funds: “We are just a little old investment firm, just two traders and two computers, no carbon emissions here! And our credit is very good, because we have no other liabilities and our assets are all investment-grade bonds. ‘Which investment-grade bonds,’ did you ask? Sorry, I’m not sure I heard you right, you’re breaking up. Anyway we’ll look for your check, bye!”
Though my made-up names are silly, and in the actual Aramco case one of the not-an-oil-company SPVs is named “GreenSaif Pipelines Bidco.” “Pipelines” is right in the name! The only way you would think that GreenSaif Pipelines Bidco “had no direct links to the fossil-fuel industry” is if (1) you started reading the name but stopped after you got to the “Green” part (plausible!) or (2) you never read the name at all, never thought about it, just looked at the balance sheet and saw only shares of stock, not pipelines or oil wells, and said “ah, stock, well, that’s green enough.”
Author(s): Matt Levine
Publication Date: 12 July 2023
Publication Site: Money Stuff at Bloomberg