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Private Credit

The Evolving Opportunity in Infrastructure Debt

August 2023 – 9 min read

In addition to infrastructure debt’s defensive nature, diversification benefits and potential to offer compelling risk-adjusted returns, infrastructure’s “essentiality” underscores its appeal throughout the economic cycle.

Infrastructure: Essential and Evolving

In today’s quickly evolving global economy, many institutional investors have turned to infrastructure debt for potential benefits ranging from an illiquidity premium over public markets to enhanced diversification, risk protection and asset-liability matching characteristics. Amid often varying definitions of infrastructure debt among managers, banks, and investors, at Barings the definition centers on the type of asset generating the cash flow, with an emphasis on essential assets that meet key social or economic needs and that have the potential to offer stable, long-term cash flows. In our view, today’s evolving infrastructure universe encompasses six broad categories:

Economic Infrastructure

  • Transportation-related strategic assets such as toll roads, seaports, airports, railroad rolling stock

Utilities and Pipelines

  • Regulated or unregulated distribution and transmission assets, which typically carry water, sewage, electricity, natural gas, and other fuels

Power Generation

  • Renewable energy generation assets (solar, wind or hydro), batteries, and EV charging infrastructure

Social Infrastructure

  • Government-sponsored public-private partnerships and social housing, and development of hospitals, parks, government buildings and schools

Midstream and Storage Facilities

  • Commodity product storage, energy, and non-energy assets

Digital Infrastructure

  • Towers, fiber cabling and data centers in well-understood markets or regimes

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Pieter Welman

Head of Global Infrastructure

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

Unless otherwise mentioned, the views contained in this document are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Parts of this document may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Any investment results, portfolio compositions and/or examples set forth in this document are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this document. No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments.

Investment involves risks. Past performance is not a guide to future performance. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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