GE tilts at green power protectionism
Like Kermit the frog, General Electric vice-chairman John Krenicki occasionally laments that it's not easy being green.
Mr. Krenicki runs GE's massive energy division - its 85,000 employees posted $37-billion in sales last year - and on the face of it, everything's going his way. Anyone getting into wind power will likely order GE turbines. The same is true on solar, hydro, grids and just about any other technology that keeps the lights on. As a dominant player in green power, Mr. Krenicki would seem to have the world at his feet.
But here's where Kermit's problem comes in to play: It's not easy being green because sustainable power has become such a hot button issues for politicians. No self-respecting leader has a power policy that doesn't include voter-friendly planks, such as local jobs in green manufacturing, or local content in green power projects. Political overlays tend to add inefficiencies to power, and the process-driven GE types just hate inefficiency.
So on the eve of the G8 and G20 summits last week, Mr. Krenicki did a Canadian tour, to preach the gospel of eliminating trade barriers on green power. (An engineer by training, he recent made the same pilgrimage on the other side of the Atlantic, helping set continental energy policy within the European Union, in part by pitching at the World Economic Forum.)
The core of GE's message is that the power industry rewards scale: Large, integrated markets will get cheaper green power than small, fragmented markets. Policies that put local interests, such as green jobs, ahead of this over-arching goal are bad policy.
In making this case, GE is clearly talking its own book. But consider what Mr. Krenicki is arguing; there's a Buy America policy in Washington in the wake of the recession. A GE executive who should be wrapping himself in the Stars & Stripes hates that nationalist concept. He sees an America-first policy hurting GE in most of the countries it serves, including China, India and Canada.
"The end result of protectionist policies on green power is simple. Consumers pay more than they should," Mr. Krenicki said in an interview. GE is pushing hard for national strategies that create the largest possible markets for green technology. Once that market exists, stand back and let the best players win. As the barricades went up in Toronto last week, and most business leaders headed out as the politicians arrived, that was the message Mr. Krenicki was pitching.
Bond market breather
The streets of Toronto were full of cops and protesters over the past week, but judging by the near complete lack of financing activity, the offices towers were empty.
Domestic corporate bond markets have seen an average of $1.8-billion of new issue activity a week this year. Last week, with the G8 and G20 circuses in town, and Quebec celebrating a holiday, corporate bond financings dropped to just one small deal: Manulife Financial sold a $60-million floating rate note. There wasn't a single provincial bond sale last week: That market typically sees $1-billion of new issues each week.
That's created something of a backlog in credit markets, as Desjardins Securities said Monday in a report: 'The potential for new issuance remains good with some deals still in the pipeline waiting for being launched."
Who might be raising money in coming days? National Bank recently filed the paperwork needed to sell up to $1.7-billion of notes backed by its credit card loans to clients, and Westcoast Energy is expected to launch a 10-year bond offering.
Equity markets also showed signs of life Monday after a sleepy week. Detour Gold raised $252-million in a bought deal stock sale that was led by BMO Nesbitt Burns and TD Securities. In the junior energy sector, Second Wave Petroleum raised $27-million in a bought deal led by Wellington West Capital Markets and GMP Securities.
Stephens moves to RBC
RBC Dominion Securities landed a mining specialist in Europe on Monday, hiring Jonathan Stephens away from rival CIBC World Markets in London. Mr. Stephens joins RBC as a director after seven years at CIBC, and stints at JPMorgan and Deutsche Bank prior to that.
RBC also deepened its coverage of European, Middle East and Asian (EMEA) currency markets by hiring JPMorgan veteran Robert Beange as a managing director and head of EMEA strategy. Mr. Beange was JPMorgan's London-based foreign exchange strategist, covering Russia, Eastern Europe and the Middle East.
