As the threat of climate change takes on greater importance throughout the world, investors are requiring more definitive statistics to make sound decisions. Intercontinental Exchange Inc., a global provider of data, technology and market infrastructure, and DeltaTerra Capital, an investment research and consulting firm focused on climate risk analysis for institutional investors, have collaborated to offer climate-adjusted credit risk analytics for residential and commercial mortgage-backed securities.
The new joint offering integrates ICE’s Climate Physical Risk Data with DeltaTerra’s climate analytics, financial risk models and market data to deliver risk impact estimates for investors in the residential and commercial mortgage-backed securities markets. By combining key data from both firms, the service offers a climate risk analytics solution that provides insights at the property, loan, deal and bond levels, which is easily translated into investment analysis.
ICE’s Climate Physical Risk Data applies geospatial climate, economic and demographic data to specific U.S. municipalities, MBS pools and related fixed income securities. The DeltaTerra Klima suite of climate risk analysis tools provides metrics and reports for securitized credit investors who manage risk in some of the most climate-exposed capital markets, such as RMBS, CMBS, and credit risk transfer securities (CRT). Together, ICE and DeltaTerra’s joint solution translates physical climate risk estimates into financial risk assessments, including asset price depreciation risk and default risk for mortgage-backed securities.
“In our prior roles as asset managers, we saw the need to simplify the translation of hazard risk to bond performance risk to assist market practitioners as they deal with the current state of change,” says David Burt, CEO at DeltaTerra. “The Klima models and analytics are an important toolkit providing transparency into whether markets are adequately factoring in future insurance costs and other climate-related fundamental drivers when buying and selling property, loans and related securities. The collaboration with ICE can bring these solutions to the market rapidly at scale with a leading climate and market data provider.”
ICE offers a suite of Climate Physical Risk Data, which includes geospatial climate, economic and demographic data to help investors quantify climate risk exposure across municipal bond and MBS portfolios.
Photo by Ralph W. Iambrecht
