ICE Launches New Suite of Physical Climate Risk Municipal Indices Integrating ICE Climate Risk Scores
Intercontinental Exchange (NYSE:ICE) has launched a new suite of climate risk municipal indices that track the performance of securities based on exposure to acute climate risks. The indices use the ICE Climate Risk Score, which provides a comprehensive measure of estimated property risk from physical climate hazards.
The new index family includes five indices focusing on high and low physical climate risk, as well as specific risks like wildfires, floods, and hurricanes. These indices aim to help investors capture exposure to climate-related trends in the municipal bond market.
ICE research indicates that physical climate risk is not yet being priced into municipal bonds, potentially obscuring true risk. These new indices are designed to provide investors with a consistent measure of the climate-yield relationship and a benchmark for managing portfolio risk.
Intercontinental Exchange (NYSE:ICE) ha lanciato una nuova serie di indici municipali sul rischio climatico che monitorano le performance dei titoli sulla base dell'esposizione a rischi climatici acuti. Gli indici utilizzano il ICE Climate Risk Score, che fornisce una misura complessiva del rischio patrimoniale stimato derivante dai pericoli fisici legati al clima.
La nuova famiglia di indici comprende cinque indici che si concentrano sui rischi climatici fisici elevati e bassi, nonché su rischi specifici come incendi boschivi, inondazioni e uragani. Questi indici mirano ad aiutare gli investitori a cogliere l'esposizione a tendenze legate al clima nel mercato delle obbligazioni municipali.
La ricerca di ICE indica che il rischio climatico fisico non è ancora stato considerato nel prezzo delle obbligazioni municipali, potenzialmente oscurando il rischio reale. Questi nuovi indici sono progettati per fornire agli investitori una misura coerente della relazione climatica-rendimento e un benchmark per la gestione del rischio del portafoglio.
Intercontinental Exchange (NYSE:ICE) ha lanzado un nuevo conjunto de índices municipales de riesgo climático que siguen el rendimiento de valores en función de la exposición a riesgos climáticos agudos. Los índices utilizan el ICE Climate Risk Score, que proporciona una medida integral del riesgo estimado de propiedad debido a peligros climáticos físicos.
La nueva familia de índices incluye cinco índices que se centran en riesgos climáticos físicos altos y bajos, así como en riesgos específicos como incendios forestales, inundaciones y huracanes. Estos índices tienen como objetivo ayudar a los inversores a capturar la exposición a tendencias relacionadas con el clima en el mercado de bonos municipales.
La investigación de ICE indica que el riesgo climático físico aún no se está evaluando en los bonos municipales, lo que podría oscurecer el verdadero riesgo. Estos nuevos índices están diseñados para proporcionar a los inversores una medida consistente de la relación clima-rendimiento y un punto de referencia para gestionar el riesgo de la cartera.
인터콘티넨탈 익스체인지(뉴욕증권거래소:ICE)가 기후 위험 시가서 평가를 기반으로 한 새로운 시리즈의 시가상장지수를 출시했습니다. 이 지수는 ICE 기후 위험 점수를 사용하여 기후 물리적 위험으로 인한 자산 위험을 종합적으로 측정합니다.
새로운 지수 가족에는 높은 물리적 기후 위험 및 낮은 기후 위험, 산불, 홍수 및 허리케인과 같은 특정 위험에 중점을 둔 다섯 개의 지수가 포함됩니다. 이 지수들은 투자자들이 기후 관련 추세에 대한 노출을 포착하는 데 도움을 주기 위해 설계되었습니다.
ICE 연구에 따르면 물리적 기후 위험은 아직 지방 채권에서 가격에 반영되지 않고 있으며, 이는 실제 위험을 흐리게 할 수 있습니다. 이러한 새로운 지수는 투자자에게 기후-수익 관계에 대한 일관된 측정을 제공하고 포트폴리오 위험 관리를 위한 기준점을 제시하기 위해 설계되었습니다.
Intercontinental Exchange (NYSE:ICE) a lancé une nouvelle série d'indices municipaux de risque climatique qui suivent la performance des titres en fonction de leur exposition aux risques climatiques aigus. Les indices utilisent le ICE Climate Risk Score, qui fournit une mesure globale du risque potentiel lié aux dangers physiques dus au climat.
La nouvelle famille d'indices comprend cinq indices axés sur les risques climatiques physiques élevés et faibles, ainsi que sur des risques spécifiques tels que les incendies de forêt, les inondations et les ouragans. Ces indices visent à aider les investisseurs à capter l'exposition aux tendances liées au climat sur le marché des obligations municipales.
Les recherches menées par ICE indiquent que le risque climatique physique n'est pas encore pris en compte dans les obligations municipales, ce qui pourrait obscurcir le véritable risque. Ces nouveaux indices sont conçus pour fournir aux investisseurs une mesure cohérente de la relation climat-rendement et une référence pour gérer le risque de portefeuille.
Intercontinental Exchange (NYSE:ICE) hat eine neue Reihe von kommunalen Indizes für Klimarisiken eingeführt, die die Leistung von Wertpapieren anhand der Exposition gegenüber akuten Klimarisiken verfolgen. Die Indizes verwenden den ICE Climate Risk Score, der eine umfassende Messung des geschätzten Eigentumrisikos aus physischen Klimagefahren bietet.
Die neue Indexfamilie umfasst fünf Indizes, die sich auf hohe und niedrige physische Klimarisiken sowie auf spezifische Risiken wie Waldbrände, Überschwemmungen und Hurrikane konzentrieren. Diese Indizes sollen Anlegern helfen, die Exposition gegenüber klimabezogenen Trends auf dem Markt für kommunale Anleihen zu erfassen.
Recherchen von ICE zeigen, dass physische Klimarisiken in kommunalen Anleihen noch nicht in die Preise eingepreist werden, was möglicherweise das tatsächliche Risiko verschleiert. Diese neuen Indizes sind darauf ausgelegt, den Anlegern eine konsistente Messung der Beziehung zwischen Klima und Rendite sowie einen Benchmark zur Verwaltung des Portfoliorisikos zu bieten.
- Launch of new climate risk municipal indices to track performance of securities exposed to climate risks
- Collaboration between ICE's Climate and Index teams, leveraging ICE Climate Risk data
- Expansion of ICE's fixed income index offering, which covers over $100 trillion in debt across 51 currencies
- Research shows physical climate risk is not yet priced into municipal bonds, potentially obscuring true risk
Insights
The launch of ICE's new suite of climate risk municipal indices is a significant development in the financial markets, particularly for investors focused on environmental risks. These indices, which integrate ICE Climate Risk Scores, provide a novel tool for tracking the performance of securities based on their exposure to acute climate risks such as hurricanes, wildfires and floods.
This move reflects the growing importance of climate risk in investment decision-making. By offering five distinct indices, ICE is enabling more nuanced analysis of climate-related risks in municipal bonds. The inclusion of both high and low physical climate risk indices allows for comparative analysis, which could be valuable for portfolio diversification and risk management strategies.
The lack of climate risk pricing in municipal bonds, as highlighted by ICE research, suggests a potential market inefficiency. These new indices could serve as a catalyst for more accurate pricing of climate risks, potentially leading to significant repricing of municipal bonds based on their climate risk exposure. This could have far-reaching implications for municipal finance, potentially affecting borrowing costs for local governments and utilities.
For investors, these indices offer a new benchmark for assessing and managing climate-related risks in their municipal bond portfolios. However, it's important to note that the adoption and impact of these indices will depend on how widely they are accepted and used by market participants.
The introduction of ICE's climate risk municipal indices marks a significant step in quantifying and standardizing climate risk assessment in the municipal bond market. The ICE Climate Risk Score, ranging from 0.0 to 5.0, provides a comprehensive metric that consolidates various climate hazard models into a single, comparable figure. This standardization is important for investors and policymakers to make informed decisions.
The suite of indices, covering different aspects of climate risk (overall, wildfire, flood and hurricane), allows for a more granular analysis of climate vulnerabilities. This granularity is essential because different regions face varying climate risks and these indices can help highlight those specific vulnerabilities.
The observation that climate risk is not yet priced into municipal bonds is particularly noteworthy. This gap presents both a risk and an opportunity. The risk lies in the potential for sudden market corrections as climate risks become more apparent. The opportunity is for investors who can accurately assess and price these risks ahead of the broader market.
These indices could also serve as a wake-up call for municipalities, potentially encouraging them to take more proactive measures to address climate risks. This could lead to increased investment in climate resilience projects, which would be beneficial for both the municipalities and their bondholders in the long term.
Five new indices to track performance of securities of obligors exposed to climate risk, uses ICE Climate Risk Scores
The new suite of climate risk municipal indices is a collaboration between ICE’s Climate and Index teams. The indices, using ICE Climate Risk data, track the performance of securities issued by obligors with different projected vulnerability to a range of climate risks, including hurricanes, wildfires and floods.
The new index family includes:
- ICE US High Physical Climate Risk Municipal Index (MUNIHICR)
- ICE US Low Physical Climate Risk Municipal Index (MUNILOCR)
- ICE US High Physical Wildfire Risk Municipal Index (MUNIWFCR)
- ICE US High Physical Flood Risk Municipal Index (MUNIFLCR)
- ICE US High Physical Hurricane Risk Municipal Index (MUNIHRCR)
“ICE indices have helped market participants capture exposure to some of the most dynamic trends that shape the global economy, and climate risk has increasingly become an important factor in the investment decision-making process,” said Preston Peacock, Head of ICE Data Indices, administrator of the new indices. “This new suite of climate indices will be an effective tool to track advancements in the repricing of climate risk in bond markets for researchers and investors.”
The ICE Climate Risk Score serves as a singular assessment, ranging from 0.0 to 5.0, amalgamating all the ICE Sustainable Finance Platform's climate hazard models. It provides a comprehensive, relative measure of estimated total property risk stemming from physical climate hazards for a specific location, or a collection of locations related to the obligor.
“ICE research shows that, despite accelerating economic damages from severe weather, physical climate risk is not yet being priced into municipal bonds," said Evan Kodra, Head of Climate R&D at ICE. "That lack of pricing signal could obscure the true risk and perpetuate complacency around climate in the market. We are pleased to assist in the launch of new indices that can help address this, giving investors a consistent pulse on the climate-yield relationship and a benchmark for managing portfolio risk.”
These new climate risk municipal indices join ICE’s fixed income index offering, which includes approximately 6,000 standard indices tracking more than
For more information, please visit: https://www.ice.com/fixed-income-data-services/index-solutions/fixed-income-indices
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming
The indices referenced herein are administered by ICE Data Indices, LLC. Additional important information regarding the indices (including methodology, limitations, and disclaimers) is available at indices.ice.com. Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 – Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 8, 2024.
Category: Fixed Income and Data Services
SOURCE: Intercontinental Exchange
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240924483027/en/
ICE Media Contact
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Source: Intercontinental Exchange
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