In our view, the market for financing infrastructure is at an early stage of development:
Public Private Partnerships
Public Private Partnerships will be an important mechanism for developing, operating and financing infrastructure projects.
The lack of an organized trading market for infrastructure securities offers a return premium to investors.
In order to ensure their delivery of public services over the long-term, local government sponsors will manage financing risk by seeking long-term debt as a permanent source of capital to finance infrastructure projects.
Removal of Obstacles
- Government sponsors will eliminate subsidies to viable infrastructure projects
- Project sponsors will actively reduce the risk of asset/liability mismatch
- Standard security structures will replace non-standard structures