Traditional lending for infrastructure has been getting tougher for banks; therein lies the opportunity of junior infrastructure debt – ‘sensible’ leverage, less competition.
Nobody expects central banks’ New Year’s resolutions list to include lowering interest rates. Perhaps more debatable is whether the cost of borrowing further rises at the pace it has over the last few quarters.Given the stable cashflows associated with infrastructure assets, there is an attractive opportunity to take more leverage to increase returns.I always subscribed to Oscar Wilde’s view that resolutions are simply cheques one draws on a bank where they have no account.
Here’s where things get interesting. Given the stable cashflows associated with infrastructure assets, there is an attractive opportunity to take more leverage to increase returns but still benefit from solid asset backing. Therein lies the opportunity of junior infrastructure debt – it is ‘sensible’ leverage and has less competition.The downside? This market is – as the name suggests – quite private.
While the Australian market is evolving and poses a strong opportunity in the future, the bulk of opportunities is currently found on foreign shores.To investigate the risk/return more, we have broken down the credit spread into its individual building blocks: default loss risk, downgrade loss, and the residual spread – what is “left over”.
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Forrest: Why I don’t like Sun Cable, and why I want to buy it anywayThe Fortescue boss tells the AFR a cable through Indonesian and Malaysian waters is a ‘sovereign risk’, and explains his plan for shipping green hydrogen.
Read more »
Why now is the time for infrastructure private debtTraditional lending for infrastructure has been getting tougher for banks; therein lies the opportunity of junior infrastructure debt – ‘sensible’ leverage, less competition.
Read more »
Why so many women are choosing to be solo mothersHaving a baby by yourself is difficult, but for more and more Australian women it’s a choice they’re happy to make.
Read more »
This quiet achiever shows why it was the hottest tech stock of 2022Pro Medicus is continuing its stellar run, scoring its second big contract win in the last month on the back of a bumper 2022.
Read more »
On the edge of extinction: why western chimpanzees matter – photo essayPhotojournalist Roberto García Roa has been working with the Chimpanzee Conservation Centre in Guinea, one of the few international institutions trying to protect critically endangered western chimpanzees
Read more »
Major flooding devastated Forbes — so why did the SES base itself 33 kilometres away at Parkes?Forbes endured weeks of destructive flooding in 2022. Its mayor is angry the SES chose to base itself in another town, deeming it 'something you'd do in America, not in Australia'.
Read more »