Across the globe, political uncertainty is increasingly becoming the rule rather than the exception. Meanwhile, trade tensions continue to define relationships between major players – such as China the U.S. and Europe. Both factors may induce caution among infrastructure investors.
Writing for Institutional Investing in Infrastructure, S&P Global Ratings’ Karl Nietvelt, Head of Research in Global Infrastructure, agrees that geopolitical events are influencing the market.
Indeed, infrastructure is “an asset class with typically lengthy lifespans that, therefore, beneﬁts from political and regulatory calm,” according to Nietvelt. Yet today’s uncertain political climate, underpinned by elections in 2019, could dampen market confidence.
Another influential trend is the rising impact of environmental, social and governance (ESG) concerns throughout the infrastructure sector. Organisations prioritising these issues “have achieved reduced costs, mitigated risk potential, and created revenue-generating opportunities,” continues Nietvelt.
Read the full article in Institutional Investing in Infrastructure here.
According to S&P Global Ratings, the long-term investment prospects for U.K. water companies remain adequate despite the forthcoming introduction of AMP7 from April 2020.
While many industry professionals perceived the U.K regulator Ofwat as taking a tougher stance on water companies, director for EMEA Utilities at S&P, Matan Benjamin, recently told Utility Week that the new targets reflect the “requests of society” on environmental, social, and governance (ESG) concerns.
Benjamin says: “This remains a strong industry. On the one hand, things are becoming more challenging for [water] companies because the regulator aims to make them work more efficiently. But that efficiency is good for society.”
Read the full article here.
In a challenge to the traditional power market model, large corporations are increasingly entering long-term contracts to buy power directly from energy producers – rather than from utilities. While these arrangements – known as corporate power purchase agreements (PPAs) – could pose new risks for producers and consumers, these should be largely manageable, says Trevor d’Olier-Lees, S&P Global Ratings’ senior director, Infrastructure North America.
Commenting on the model’s increasing uptake in an interview with Power Technology, D’Olier-Lees says: “Given the strong demand from corporate corporations to buy renewable power, [this model] will continue to grow. And there’s always innovation around mitigation.”
Read the article in Power Technology here.
A recent report by S&P Global Ratings has concluded that growing competition from cheap renewable electricity, safety concerns, and rising costs of new plants are slowly undermining the viability of nuclear power.
“We see little economic rationale for new nuclear builds in the U.S. or Western Europe, owing to massive cost escalations and renewables cost-competitiveness, which should lead to a material decline in nuclear generation by 2040,” said Elena Anankina, the report’s author.
Despite these challenges, however, nuclear still has its role to play in the energy mix – largely due to the continual development of new nuclear capacity in Russia and China, supported by energy policies and significantly lower construction costs. Moreover, with regions such as Europe installing more intermittent sources, nuclear is playing a crucial role in ensuring grid stability.
Following outreach by Moorgate, news of the report was covered by Republic World, Stockhead here and here, NucNet, IREI, Euractiv, ESI Africa, Power Engineering International, and World Nuclear News.
S&P Global Ratings recently scored a proposed C$750 million issuance from public-private partnership (PPP) Mobilinx Hurontario General Partnership E1/87 under its Green Evaluation.
The E1/87 score represents the highest on the Green Evaluation E1-E4 scale, and comprises a Governance score of 83, Transparency score of 77, and a Mitigation score of 91.
As well as being the first Green Evaluation in Canada, the score also marks S&P Global Ratings’ first Green Evaluation on a PPP.
Proceeds will be used to design, build, finance, operate, maintain and rehabilitate the Hurontario Light Rail Transit (LRT) project in Ontario, Canada.
Following outreach by Moorgate, the Green Evaluation was covered by: IJGlobal, Proximo, and InfraNews.
S&P Global Ratings recently announced Pablo Lutereau as its new Head of Infrastructure and Project Finance in the Europe, Middle East, and Africa (EMEA) region.
Following the news of his appointment, Mr. Lutereau said, “Infrastructure plays a critical role in EMEA’s economic growth and development in terms of social well-being. As such, I’m very pleased to start the next chapter of my S&P Global Ratings career within the dedicated EMEA team and look forward to building upon our 25-year history of assessing transactions in this market.”
Lutereau moves from S&P Global Ratings’ Buenos Aires office, where he was Head of Infrastructure & Utilities in Latin America. He will start his new role in January 2020 and will be based in Madrid.
Following Moorgate’s outreach, the news was covered by TXF, IJGlobal, PFI, Proximo and Partnerships Bulletin.
In its recent report, S&P Global Ratings indicated that a no-deal Brexit could result in the downgrade of half of the 41 publicly rated U.K. social housing associations (HAs) in its portfolio by one notch. Particularly vulnerable are those ratings on providers that either depend on proceeds from market sales or receive extraordinary support from their related government.
Following outreach by Moorgate, the report was covered by Inside Housing, Social Housing, and Housing Today.
There could be turbulence ahead for ADP, France’s largest airport operator. A weakening economic environment could weigh on ADP’s credit quality during a period of significant international expansion. What’s more, ADP’s possible privatisation – despite being on hold pending a referendum – carries significant risks (should a change in ownership occur).
Writing for International Airport Review, Juliana Gallo, director, Infrastructure EMEA, S&P Global Ratings, argues that the many credit strengths in the ADP’s favour could allow the group to manage its heavy capex programme and future acquisitions, while maintaining credit metrics commensurate with an ‘A+’ rating.
Please click here to read the full article.
Market conditions for America’s independent power producers (IPPs) began to turn negative around three years ago – and they’ve barely improved since. In an article for Utility Dive, S&P Global Ratings’ senior director Aneesh Prabhu discusses how IPPs must adapt – or else face an uncomfortable future.
To continue operating against challenging market fundamentals – such as the industry’s fuel switch to natural gas, changing consumer preferences, new technologies and weakening commodity prices – IPPs have had little choice but to deleverage, diversify and, in some instances, go private. Against this backdrop, IPPs, in S&P Global Ratings’ view, cannot carry investment-grade ratings for the time being.
In his concluding remarks, Prabhu comments: “While the silver lining is that credit profiles in this segment are improving, the cloud over IPPs is yet to disperse.”
To read the full article, please click here.
On October 8, 2019, S&P Global Ratings upgraded Deutsche Bahn’s (DB) issuer credit ratings to ‘AA’ from ‘AA-’ following the news that the Germany-based rail company is to benefit from increased federal government support. The issuer rating carries a stable outlook.
Under its Climate Action Programme 2030, the German federal government will inject €11 billion into DB over 11 years, as well as reduce value-added tax (VAT) on long-distance rail tickets and raise air travel surcharges – demonstrating stronger-than-ever ongoing support. The government has also approved DB issuing a €2 billion subordinated hybrid note.
S&P Global Ratings’ lead credit analyst, Beata Sperling-Tyler, says: “The federal support package of over €11 billion by 2030, in addition to continued ongoing investment grants that cover about 70% of DB’s capex, will support capital expenditure required to modernise track infrastructure and the operating costs required to improve passenger travel comfort.”
Following Moorgate’s outreach, the issuance and issuer ratings were covered by Global Capital, Climate Change News, Euractiv and Clean Energy Wire.