Examining Infrastructure as an Asset Class

Project Finance is a well-managed asset class, with a low default portfolio. It consists of loans with higher risk in the early years and lower risk as the loans season. The Project Finance and Infrastructure industry has seen key changes recently. While banks underwent a period of deleveraging and decreased exposures to project finance and infrastructure transactions, institutional investors increased their interest in this asset class.

Currently, the market has a new equilibrium where banks and institutional investors often collaborate to devise viable financing solutions. Banks have expertise in construction risk but are hesitant to finance long-term deals. Enter the asset managers and insurance companies looking for longer maturities for asset liability matching.

This article has been provided by Moody’s Analytics Data Alliance, one of the world’s largest and most comprehensive data consortia covering Commercial & Industrial, Commercial Real Estate, Project & Infrastructure Finance, and Asset Finance.