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
In September, California Governor, Jerry Brown, unveiled a new gold standard for renewable energy in the U.S. – a mandate requiring the state to go 100% “green” by 2045. Yet for all the bill’s praise, a report published by S&P Global Ratings suggests that numerous technological and political challenges lie ahead.
As California edges towards its renewable goal, the economics of gas-fired generation promises to worsen. On the flip side, renewable energy will of course benefit though the extent of this will depend on the asset type. The durability and reliability of hydro and geothermal power, for instance, put these assets in pole position. Question marks remain over solar and wind, however: the intermittent nature of these resources will, according to some estimates, necessitate a 200-fold increase in battery storage. Development in this sector has yet to truly take off.
Following Moorgate’s outreach, Climate Change News, Infrastructure Investor, Energy Manager Today, Energy Manager Today, NA Clean Energy, and Environmental Finance covered the news.
In an interview with Institutional Investing in Infrastructure (i3), Stefania Belisario, associate director, S&P Global Ratings, discussed the credit implications for car parks that may follow greater market penetration of autonomous vehicles and ride sharing.
Belisario believes that the increasing use of ride-hailing services, such as Uber, and car sharing could displace individual car ownership – and, in turn, reduce car parking demand. Moreover, the development of electric and autonomous cars will likely modify the services that car parks will need to provide in the long term and may restrict car parking demand.
That said, car park operators can still act to futureproof their investments, with operational efficiency improvements a likely avenue. Belisario forecasts “operators’ profitability measures [to] remain at least stable, provided that they are unaffected by any overseas investment or by any changes in their corporate perimeter.”
Read the full article here.
A recent Infrastructure Investor article assessing investment opportunities in Latin America featured S&P Global Ratings’ research into the development of Colombia’s road network. The rating agency believes that the 4G road network, which began development in 2013, has made “significant progress under the current administration”.
To read the full article, click here (please note that the article is behind a paywall)
With ample desert space and swathes of sunshine all year round, the countries of the Gulf Coorporation Council (GCC) are well placed to benefit from renewable technology advancements and lowering costs in the solar industry. Rachel Goult, Director at S&P Global Ratings, explores developments in the region in Power Energy Solutions Solar.
To read the full article, please click here.
S&P Global Ratings rated its first onshore wind project in 2003. Since then, the renewable energy sector has undergone tremendous expansion. In Latin America in particular, onshore wind power sources are playing an increasingly important role. Julyana Yokota, Director, considers the unique challenges and opportunities facing onshore wind power producers in the Latin American region.
To read the full article, please click here.
With ongoing advances in sustainability, the risk of being unable to monetise carbon assets grows by the day. A new book from Routledge, Stranded Assets and the Environment: Risk, Resilience and Opportunity, explores the ramifications of asset stranding across various sectors of the global economy.
Mike Wilkins, Head of Sustainable Finance at S&P Global Ratings, supplies chapter 8, drawing on research and real-world corporate case studies to focus on the credit implications of stranded assets.
The financing of green infrastructure projects is rising worldwide. And alternative financing tools are piquing the interest of investors, many of whom are increasingly sensitive to climate concerns.
Michael Ferguson, Director, U.S. Energy Infrastructure and Sustainable Finance at S&P Global Ratings, highlights the expansion of the U.S.’ decarbonisation efforts and how green bonds are used in this transformation.
Read the full article here
On 17 April 2018, S&P Global Ratings marked the launch of its Sustainable Finance team. At a reception in central London, the team, which includes members from North America, hosted specialist and tier one agencies.
The Sustainable Finance Team is a cross-practice, dedicated team of S&P Global Ratings analysts who cover environmental, social and governance (ESG) analytics and research, insight into sustainable infrastructure trends worldwide, and the S&P Global Ratings Green Evaluation – an asset-level environmental credential, launched in early 2017.
Moorgate worked with the communications team at S&P Global in arranging the event, including invitation attendance, content for distribution, and all venue logistics.
To see the new S&P Global Ratings Sustainable Finance website, please click here.