AUSTRALIA - The infrastructure debt market is being targeted for opportunities by institutional fund manager QIC.
It said infrastructure debt represents an attractive investment due to its steady cash flows, high barriers to entry and historical record of withstanding economic downturns.
Susan Buckley, managing director, active management, at QIC, said investors were seeking investment opportunities with a stable underlying credit profile in the current economic environment.
She said infrastructure assets were currently attractive as downturns in the economy usually had minimal impact on the demand for essential infrastructure services and their income streams were often regulated or guaranteed by governments.
She said: "QIC's investment scorecard process has identified significant pricing opportunities in infrastructure assets due to indiscriminate and forced selling.
"Experienced investors who understand infrastructure will be well placed to take advantage of the current opportunity to access infrastructure loans at a discounted price."
QIC's infrastructure debt strategy involves using leveraged loans rather than high yield bonds.
Buckley said leverage loans provided benefits, in that they were a senior secured debt and had historically higher recovery rates than high yield bonds
"Loans typically also have more protections written into the contract requiring the borrower to meet minimum financial performance measures," she said.
"We believe infrastructure loans currently present a strong opportunity to generate high returns with an attractive risk profile when compared to similarly rated bonds and loans."
QIC is one of Australia's largest institutional fund managers with A$70bn under management for its Australian and overseas clients.
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