Asia starts to price in stranded assets, although significant uncertainties remain

SEMBCORP Industries sold its India-based coal power unit earlier this month at no impairment cost, much to the relief of chief financial officer Eugene Cheng.

Cheng, who described a “lack of liquidity” in global financing markets for coal assets, knew how fortunate he was. Analysts told The Business Times that capital markets and insurers are beginning to price in the risk of asset stranding, spurred by changes in the market and regulatory environments.

Pricing is more advanced in sectors where stranding risk is already well established, like for coal.