Breckinridge Introduces Bond Rating Method


Breckinridge Capital Advisors developed a proprietary in-house Sustainability Modeling Framework that rates corporate and municipal bonds.




Breckinridge’s Sustainability Model uses 16 metrics and five categories of sustainability factors to evaluate each state or local government issuer and similar and additional measures for corporate borrowers. Data from MSCI, Bloomberg and Sustainalytics is aggregated and combined with calculations Breckinridge has created in-house to evaluate extra-financial environmental, social and governance (ESG) factors.  

Bond issuers are ranked from S-1, acceptable social/environmental essentiality and minimal environmental, economic, social, governance (EESG) risks, to S-4, unacceptable social/environmental essentiality and high EESG risks.  

Breckinridge began developing a capability in sustainable investing (SI) two years ago as the investment team came to the conclusion that an assessment of a borrower’s future costs from environmental, social and governance impacts is crucial to mitigating risk in the portfolio.  

“We believe that future costs associated with unsustainable practices have to be recognized and reflected in the price of the bond. Consequently, in addition to evaluating a borrower’s financial fundamentals, our credit research methodology systematically analyzes extra-financial considerations such as environmental impact, essentiality, connection with community and corporate governance. We believe that these and other factors are crucial to evaluating a company or community’s ability and willingness to pay back their bond holders and will play a huge part in improving long-term risk adjusted returns of our portfolios,” said Peter Coffin, the founder and president of Breckinridge.