SECTION I · ENERGY

ENERGY EXPANSION

How Europe Transformed an Energy Crisis Into Structural Resilience

When Russia’s invasion of Ukraine in 2022 severed Europe’s primary gas supply corridor, the continent faced a reckoning that policy-makers had long deferred. Four years on, the Middle East war has returned energy security to the top of Europe’s political agenda — yet the context is fundamentally different. Europe’s power system, as EDP CEO Miguel Stilwell d’Andrade made clear in his conversation with S&P Global’s Alex Blackburne, is materially more resilient than at any prior point in recent history.

What Has Structurally Changed in Europe’s Energy Architecture?

The answer, in a word, is scale. The region’s massive expansion of wind, solar and grid-scale storage has materially altered the supply stack. Where Europe once relied on imported hydrocarbons to balance its system in extremis, the renewable base now provides a structural buffer that was simply absent in 2022. EDP — one of Europe’s largest utilities and among its most active renewable developers — offers a lived vantage point on this shift.

What Are the Remaining Vulnerabilities in Europe’s Energy Transition?

Progress has not been uniform. Stilwell d’Andrade’s candour on this point is as important as his confidence: the geographic and regulatory patchwork across EU member states means that some national grids remain significantly more exposed than others. The danger is complacency — mistaking the aggregate strength of the renewables build for a guarantee of localised security.

• Regulatory heterogeneity across member states creates uneven resilience — southern and eastern European grids remain more exposed than north-western peers.
• The critical policy imperative is not legislative innovation but disciplined delivery of existing frameworks: permitting acceleration, grid investment timelines, and capacity auction design.
• Storage — the bridge technology linking intermittent generation with continuous demand — is the single most underfunded segment of the transition stack.
• A second Middle East shock, prolonged beyond the Strait of Hormuz disruption, would test the remaining fossil-fuel dependencies in the German and Italian industrial bases specifically.

SECTION II · GLOBAL TRADE

EMERGING MARKETS MONTHLY HIGHLIGHTS

Oil at $100 Per Barrel: The Cascading Credit Shock Emerging Markets Cannot Absorb Cleanly

S&P Global Ratings has revised its oil price assumptions upward in response to the continuing blockage of meaningful supply through the Strait of Hormuz. The revision is significant in both its magnitude and its timing: Brent crude is now projected to average $100 per barrel for the remainder of 2026 — a $15 per barrel upward revision — at a moment when most emerging market fiscal frameworks were calibrated to substantially lower assumptions.

Which Sectors and Markets Face the Most Direct Stress?

The first-order impact concentrates in energy-intensive industries across the most import-dependent economies. S&P Global’s analysis explicitly identifies Egypt, Turkey and select Asian emerging markets as the highest-risk jurisdictions for direct credit pressure.

Why Does the Fertilizer Channel Matter Disproportionately?

Fertilizer trade flows are modest relative to most emerging markets’ aggregate GDP — but this framing understates the systemic significance. The fertilizer channel is a transmission belt from energy markets to food security: natural gas is the primary input to nitrogen-based fertilizers; a sustained $100/barrel oil environment drives gas prices in correlated fashion, compressing fertilizer affordability precisely when agriculture sectors are already facing supply chain freight and insurance cost inflation from Middle East disruption. The secondary spillovers — to food prices, rural employment, and social stability — represent a qualitatively different order of risk than the first-order balance sheet stress captured in standard credit metrics.

SECTION III · PRIVATE MARKETS

PRIVATE MARKETS

Wealth vs. Institutional: How Private Market Investing Is Crossing the Divide

For decades, the institutional and wealth-management worlds operated in distinct registers when it came to private markets. Pension funds, endowments and sovereign wealth funds built sophisticated alternatives programmes over thirty years; high-net-worth individuals and family offices accessed a narrow, often inferior slice of the same opportunity set. That structural bifurcation is dissolving — rapidly. Kurt Nye, CIO and managing partner at MAI Capital Management, offers a practitioner’s analysis of both the opportunity and the discipline required to navigate it.

What Is the J-Curve and Why Does It Determine Client Success in Private Markets?

The J-curve — the characteristic performance pattern of private equity and private credit funds in which early years show negative returns (management fees and deployment costs drag before realised gains) before the portfolio curves upward — is the single most misunderstood concept for new entrants to private markets. Nye’s emphasis on J-curve education reflects a real industry failure: wealth clients who enter private market allocations without genuine preparation for the initial drawdown phase are precisely those who redeem prematurely, converting temporary paper losses into permanent ones and destroying the very return premium that made the allocation rational.

How Do Secondaries Reshape the Risk/Return Profile for Private Market Newcomers?

The secondaries market — in which investors purchase existing fund interests or direct portfolio positions from sellers seeking liquidity — offers a structurally different entry point than primary fund commitments. For wealth clients new to private markets, secondaries carry three meaningful advantages: they enter at a stage where significant capital has already been deployed (reducing blind-pool risk); they purchase at discounts that emerged from seller liquidity pressure; and they access vintages where the J-curve drag has been partially or fully absorbed by prior investors. Nye’s emphasis on secondaries as a return-smoothing mechanism reflects their evolving role from opportunistic to strategic within well-constructed private market programmes.

What Does Education and Transparency Actually Mean in Private Market Practice?

• Transparency in private markets means communicating — in advance, not retrospect — the realistic return timeline, drawdown expectations, and distribution cadence of each structure.
• Education cannot stop at fund selection: clients must understand the fundamental difference between reported NAV and realised value, and why quarterly marks are estimates, not prices.
• Expectation-setting on J-curve dynamics should precede any commitment, with scenario modelling showing what the allocation looks like at months 6, 18, and 36 — before any distributions begin.
• Secondaries provide not only a return-smoothing mechanism but an educational bridge: clients who begin with seasoned fund interests experience private market dynamics with lower initial pain, making them better prepared for subsequent primary commitments.

INTELLIGENCE FAQ

Is Europe’s energy resilience durable or dependent on continued Middle East stability?

Europe’s resilience is now structurally embedded rather than conjunctural. The renewable build has fundamentally altered the supply stack, meaning that European utilities are no longer as dependent on spot LNG or Middle East oil transit as they were in 2022. The risk is policy delivery slippage — not a return to 2022 conditions. However, southern and eastern European industrial bases remain more exposed, and storage investment remains underfunded relative to generation capacity additions.

At $100/barrel, which emerging markets are most likely to require IMF programme engagement?

Egypt and Turkey are the most directly flagged by S&P Global Ratings. Egypt’s external financing requirement, combined with food import sensitivity and a heavily subsidised energy sector, makes it acutely vulnerable to a sustained $100/barrel environment. Turkey faces compounding pressures from lira depreciation, already-elevated inflation, and industrial energy intensity. Several Asian emerging markets — particularly those with high oil import bills and limited fiscal space — face meaningful GDP growth downgrades.

How should a family office currently underweight private markets begin to build an allocation?

Kurt Nye’s framework suggests beginning with secondaries rather than primary fund commitments. This approach reduces J-curve exposure, provides earlier visibility on portfolio composition, and creates an educational foundation for subsequent primary commitments. Transparency and expectation-setting must precede any deployment: family investment committees should undergo a formal J-curve literacy process before any capital is committed. Target allocation size, liquidity timeline, and distribution expectations should all be documented as investment policy statement provisions — not post-hoc rationalisation.

What are the second-order market signals most important to monitor over the next 90 days?▼

Four signals warrant close tracking: (1) Strait of Hormuz throughput normalisation or further deterioration — the $100/barrel assumption rests on continued suppression through end of May; (2) European permitting reform delivery milestones, particularly in Germany and Spain; (3) African swine fever spread trajectory in Europe, with direct implications for feed demand and agri-sector credit; and (4) US refinery yield mix decisions as summer driving season opens — the jet fuel/gasoline trade-off will have direct implications for European aviation margins.

What are the second-order market signals most important to monitor over the next 90 days?

Four signals warrant close tracking: (1) Strait of Hormuz throughput normalisation or further deterioration — the $100/barrel assumption rests on continued suppression through end of May; (2) European permitting reform delivery milestones, particularly in Germany and Spain; (3) African swine fever spread trajectory in Europe, with direct implications for feed demand and agri-sector credit; and (4) US refinery yield mix decisions as summer driving season opens — the jet fuel/gasoline trade-off will have direct implications for European aviation margins.