U.S. Elections 2016
Barings’ investment professionals provide insights on how the U.S. presidential election may impact the fixed income, equities, alternatives and real estate markets.
Infrastructure spending in the U.S. was one of the issues that both major parties actually agreed upon during the election process. We believe that the U.S. will be embarking on a period of increased fiscal spending in the coming years to update ageing infrastructure. This should provide a boost to economic growth and also result in opportunities for debt providers like Barings to participate in the private financing of some of these projects.
The rebuilding of American infrastructure was an oft-repeated rallying cry during the election process and as such we would expect to see major fiscal spending initiatives announced by the Trump administration. As opposed to a Clinton administration where the focus would likely be on renewable energy as an important domestic agenda, we expect Trump to focus more on conventional energy sources to not only ensure energy independence but to include building out the U.S. capability to export natural gas. For instance, the Keystone pipeline is a project that will likely move forward under his administration. Infrastructure spending associated with defense will also be a likely priority and could include things like housing and hospitals for the military.
Additionally, given Trump’s private market background, we would anticipate a focus on Public Private Partnerships (PPPs) and generally more privatization of infrastructure projects. We see strong support from institutional investors to participate in the financing of these infrastructure projects based on our discussions with infrastructure investors, sponsors, and contractors we work with. Barings’ strong relationships with key stakeholders including project sponsors and contractors may result in increased opportunities to provide private debt financing in the years to come for a variety of infrastructure projects in the U.S. and globally.
Emeka Onukwugha, CFAManaging Director, Barings Global Infrastructure Debt Group
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