Moody's: Despite wave of infrastructure capital, investment opportunities remain scarce

Although there is substantial debt capacity available from banks and institutional investors to finance infrastructure developments in creditworthy, stable economies, there is a shortage of investment opportunities, notes Moody's Investors Service. The large and growing requirement for infrastructure investment is high on the agenda of policy makers across the globe, and there are a number of international initiatives currently underway with the aim of bringing forward infrastructure projects, which could present appealing investment opportunities for the private sector.

The report titled "Infrastructure Renewal and Investment: A wave of capital for infrastructure, but mismatched with investment opportunities" is now available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release.

"Substantial long-term debt capacity is available from banks and institutional investors to finance well-structured infrastructure projects located in creditworthy, stable economies", said Andrew Davison, Moody's Senior Vice President. "However, access to long-term finance remains constrained where projects are located in less creditworthy countries, or face significant or speculative risks that are difficult for the private sector to quantify and mitigate", added Mr Davison.

A relative lack of investment opportunities for investors seeking infrastructure assets in creditworthy, stable countries has contributed to mismatches between available debt capacity and investable deal flow. Moody's foresees a number of consequences arising from resulting competition between debt providers, including the erosion of credit quality and the potential mispricing of risk.

Several recently launched international initiatives such as the G20's Global Infrastructure Initiative, the European Commission's Investment Plan for Europe (the "Juncker Plan", which aims to stimulate EUR315 billion of additional private sector investment in strategic sectors, including infrastructure, over 2015-17) and the World Bank Group-led Global Infrastructure Facility are intended to bring forward high quality, well-structured infrastructure projects across advanced, emerging market and developing economies alike. In due course, these initiatives will provide new investment opportunities in infrastructure debt.