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.
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.
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
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).
Rachel Goult, Director, S&P Global Ratings, looks at the GCC’s efforts to become a large producer of solar energy – and how new capital market involvement and green Islamic finance initiatives could help support the growing industry.
To read the full article please click here.
US infrastructure needs are enormous. Water, wastewater and irrigation systems alone require more than US$630bn of investment up to 2033 to bring them up to modern standards, according to Environmental Protection Agency estimates. Green finance could be used to help meet these substantial infrastructure requirements, writes Michael Ferguson, Director, S&P Global Ratings in Public Finance International.
To read the full article, please click here. (please note that the article is behind a paywall)
S&P Global Ratings has published its latest edition of Infrastructure Finance Outlook – the quarterly newsletter reviewing the global infrastructure sectors’ key new stories.
Changes in regulations and advances in technology have plunged the infrastructure sector into a period of disruption. In this edition, S&P Global Ratings discuss the credit risks and opportunities that the rise of autonomous vehicles and smart cities present to investors and issuers – as well as how political and regulatory risk and sustainable finance initiatives are evolving.
Moorgate compiles, designs and edits Infrastructure Finance Outlook.
Read it here.
Speaking to BBC Business Live, Chris Southworth, ICC Secretary General, explains that the expansion of Heathrow Airport and approval of a third runway was exactly what British businesses needed to remain competitive, especially following Brexit.
Countering claims that investment should have gone to regional airports instead, Southworth said it was not a case of “either or” but of “both and” – with a pressing need for the UK to invest in all its aviation infrastructure to support trade and economic growth.
“An expanded Heathrow will increase the UK’s ability to develop international trade links with the rest of the world, particularly with emerging markets. New routes, connections and cargo capacity will benefit businesses of all sizes and sectors in every region” Southworth further stated.
Watch the full interview here.
Bazalgette Finance has issued £175 million of index-linked green bonds to fund its Thames Tideway Tunnel (TTT) in London. S&P The financing has received an S&P Global Ratings’ Green Evaluation score of E1/95.
Noemie de la Gorce, analyst in S&P Global Ratings’ sustainable finance team said that the S&P Global Ratings’ high green evaluation score includes the “positive environmental impact from the increase of available fresh water in the tidal Thames from wastewater treatment, as well as carbon savings.”
This news was covered in Waterbriefing, Utility Week, IJ Global, Better Society, Environmental Finance (please note the paywall/login for the last three websites).
S&P Global Ratings’ senior director and lead for Infrastructure EMEA, Mar Beltran, has warned airport operators of the future disruption in the face of evolving trends in the retail and mobility industries.
In an article for Airport Business, Beltran explains that technological disruption from online retail outlets and ride-hailing apps are threatening airports’ commercial and ground transportation business models.
Read the full article pages 14-15 of Airport Business (May 2018 edition). Aviation Pros reprinted the article here.