Following the announcement of Spain’s National Commission on Markets and Competition (CNMC)’s plans for the new regulatory period, S&P Global Ratings’ Massimo Schiavo and Gerardo Leal gave an exclusive comment to Infrastructure Investor on the impact of the update on the credit quality of utilities in the country.
“This is harsher than we were expecting,” said Schiavo of the regulatory review, which could see revenues reduced by up to 22% for gas distribution and transmission companies.
Please click here for the full article (behind paywall).
As focus on environmental, social, and governance (ESG) factors increases due to their potential impact on profit margins, Michael Ferguson, Director, Sustainable Finance at S&P Global Ratings, explores some of the most pressing risks affecting infrastructure classes, as well as the ESG opportunities that are being unearthed in the latest edition of GLIO.
“As ESG awareness and disclosure practices take root,” says Ferguson, “entities across the sector could be both better prepared for longer term, emerging ESG risks and able to anticipate strategic opportunities, rather than playing catch-up.”
For Australia’s infrastructure corporates, a multitude of risks lie on the horizon. Despite boasting years of robust growth, a more subdued outlook emerges for the near-term, driven by increasingly volatile market conditions. And driving growth in the longer term will call for substantial infrastructure investment. It is no surprise, then, that observers might ask: are the country’s corporates well prepared to manage these pressures?
Writing for Infrastructure Investor, S&P Global Ratings’ Parvathy Iyer argues that it seems so.
The key for corporates overcoming softer revenues and a challenging economic climate, Iyer argues, will be timing flexibility. And while Australia’s infrastructure sector has significant capital expenditure in progress or under consideration, companies spanning the airport and port sectors should have some freedom to alter their timing and level of spending in response to the economic climate.
To read the full article, please click here (behind paywall).
Prospective investors are increasingly focusing on environmental, social and governance (ESG) factors when making investment decisions. But while, traditionally, focus centred more on environmental factors – given these tend to be more visible than social and governance factors – social and governance factors are becoming more prominent in decision-making, not least because the links between strong governance and company performance is being better understood. That’s according to Mike Wilkins, S&P Global Ratings’ Head of Sustainable Finance, who was interviewed recently by Infrastructure Investor.
“There’s been a refocus on governance as an issue,” says Wilkins. “In our experience, we see governance as having a bigger impact towards the evaluation than the other two components.”
The full interview can be found here (behind paywall).
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.
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.
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.”
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.
Writing for Brink Asia, Ruediger Geis, Head of Trade affairs at Commerzbank AG, discusses China’s Belt and Road Initiative (BRI), and the green financing options being explored to fund aspects of it.
Geis considers China’s definition of ‘green’ – given that the country has been the leading emitter of greenhouse gases since 2007 – and the possibility that the project is catalysing a shift towards greener business in the region. China Development Bank successfully issued the first green BRI bond in 2017, supported by Commerzbank.
The article was published on Brink Asia in March 2019, and can be accessed here.
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.