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Inside S&P Global Ratings IFR Outlook H1 2019: Political uncertainty, sustainability and ESG

S&P Global Ratings has published 2019’s first edition of Infrastructure Finance Outlook, its newsletter of key infrastructure and project finance-related research and ratings news.

In this edition, S&P Global Ratings considers global infrastructure investment trends, spanning China, the GCC and the Americas, along with the regulatory and political risk factors across these regions.

With global political uncertainties on the rise, infrastructure investors are even more focused on long-term sustainability. And, as environmental, social, and governance (ESG) considerations are rising to the fore of investment strategies, the credit rating agency dedicates this edition to providing greater insight to its newest offering, the ESG Evaluation.

Please see the full newsletter in PDF here.

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S&P Global Ratings’ Gloria Lu and Abhishek Dangra discuss looming volatility in Asian infrastructure market for Brink Asia

S&P Global Ratings’ Gloria Lu, Senior Director of Corporate & Infrastructure Ratings, Asia Pacific, and Abhishek Dangra, Director, Asia Pacific Corporate Ratings, recently discussed the looming volatility shadowing Asia’s infrastructure market for Brink News, offering their own views and potential responses to increasing risks proliferating in the region.

Discussing the refinancing risks that China may face as a third of the market’s debt approaches maturity in the coming months, Lu and Dangra consider some options available to mitigate external pressures, such as political and regulatory reform.

Read the full article here.

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S&P Global Ratings’ Julyana Yokota reviews Latin America’s changing infrastructure landscape for Brink News

In a commentary for Brink News, Julyana Yokota, Director of Infrastructure Ratings at S&P Global Ratings, highlights the geopolitical and regulatory risks that are driving a shift in investor sentiment towards Latin American infrastructure.

Yakota considers Brazil, Mexico and Argentina individually, alongside the broader regional landscape, stating that “credit conditions have significantly improved…particularly with regard to utilities’ regulatory stability and transparency.”

The full commentary can be found here.

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S&P Global Ratings’ Candela Macchi explores Latam’s infrastructure market growth for Financier Worldwide

Financier Worldwide has published a commentary written by S&P Global Ratings’ Director and Sector Lead in the Infrastructure Ratings Practice in Latin America, Candela Macchi, in which she examines the expansion and resilience of the region’s infrastructure market and the discrepancies between its’ industries.

Emphasising the longevity within this asset class, Macchi predicts that although changes to regulatory frameworks will pose new challenges and unpredictable political landscapes could undermine market confidence, investors may still find comfort in the favourable conditions that traditionally characterize the infrastructure market.

The full article can be found here.

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S&P Global Ratings publishes its latest edition of Global Infrastructure Finance Outlook

What key trends do infrastructure investors face in 2019? For one, nationalist and populist movements are on the rise – creating an environment of heightened political risk, which investors may find hard to navigate. The result could weigh heavily on regulatory stability, as well as country risk or sovereign credit quality.

In tandem, environmental, social, and governance (ESG) matters are beginning to rise in prominence. Increasingly, investors are stepping up their focus in their investment mandates on companies that are seen as acting more sustainably.

Against this backdrop, the latest edition of Outlook keeps investors abreast of the most-read research from the past quarter – offering insights into how the Infrastructure segment is changing and, importantly, how it may yet evolve.

Outlook is available in PDF here

Moorgate compiles, edits and designs Infrastructure Finance Outlook.

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S&P Global Ratings explores the upcoming trends for North America’s regulated utilities and merchant power; covered by the specialist press

In its “Industry Top Trends 2019” reports for North America’s regulated utilities and merchant power, S&P Global Ratings found that the utility sector’s credit outlook is stable – with both regulated providers and independent power producers likely to see low levels of growth next year.

The reports also found that North American utility industry weaker credit measures from tax reform will likely persist in 2019, reflecting tax-related rate reductions carryovers. However, some utilities will likely offset this reduced revenue with further equity infusions or asset sales.

Following Moorgate’s outreach, Utility Dive covered the news

 

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S&P Global Ratings’ Michael Ferguson explains the credit implications of California’s renewable mandate in Utility Dive

In September 2018, now-outgoing California Governor Jerry Brown signed SB100: a mandate to keep California on a path to deriving 100% of its power from clean sources by 2045. In an article for Utility Dive, S&P Global Ratings’ Michael Ferguson explains how this may mean significant credit implications for the state’s power generators.

Undeniably, SB100 is a boon for renewable energy assets in California. But it’s a mistake to consider these benefits to be mutually interchangeable — instead some assets stand to benefit more than others.

Ferguson writes: “While SB100 will naturally benefit existing solar and wind power, less obvious is by how much and when. Both asset types represent most renewable installations in the Golden State. Yet they are by no means immune from risk.”

Read the article here.

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S&P Global Ratings’ analysts discuss the latest trends for transportation infrastructure in an interview with IREI

A changing geopolitical landscape could adversely affect traffic volumes in the transportation infrastructure sector, as U.S.-China trade tensions escalate and Brexit approaches.

S&P Global Ratings’ analysts recently spoke to Drew Campbell, i3 senior editor, IREI, about the ramifications for transportation assets.

Specifically in the case of Brexit, one possible outcome is increased spending to balance any downside. S&P’s analysts respond: “As U.K lawmakers attempt to offset the prospects of slower economic growth following Brexit, investment in infrastructure could accelerate.”

Read the article here

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S&P Global Ratings’ Julyana Yokota outlines the emerging trends for airport assets in Airport World article

With Brexit fast approaching and merger and acquisition (M&A) activity on the rise, S&P Global Ratings’ senior director, Julyana Yokota, explores what 2019 may have in store for airport operators.

The primary consideration is Brexit. “Questions remain over how the impact of Brexit could hinder traffic growth – most notably for UK airport operators,” writes Yokota.

M&A activity continues to represent a key trend. In France, for instance, a recent law has permitted the sale of stakes in Aerports de Paris – the operator of the Charles de Gaulle and Orly airports. France-based infrastructure group Vinci, which currently holds an 8% stake in ADP, is keen to pursue this opportunity.

Read the article here

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S&P Global Ratings details infrastructure default and recovery statistics in landmark studies; covered by the specialist press

S&P Global Ratings has published two comprehensive studies of defaults and recoveries in the infrastructure sector.

The first report found that infrastructure sector experienced net positive rating movements in 2017, with 114 upgrades and 87 downgrades – reversing the negative trends seen in 2015 and 2016.

The second report, which explores defaults and recoveries between 1995 and2016, found that the 10-year cumulative default rate for unrated project finance bank loans was 6.3%, though this figure drops to 5.85% when only core sectors are considered. The default rate is lower still for public-private partnership (PPP) projects, including the U.K.’s PFI scheme (5.6%), which according to S&P demonstrates these schemes’ comparatively lower-risk nature.

The same report also concluded that the annual default gap between OECD and emerging markets has narrowed over the past decade – a probable result of the financial crisis, which affected advanced economies more.

Following Moorgate’s outreach, Global Capital, Project Finance International, and TXF covered the news (these items sit behind paywalls).