Moody’s Investors Service says that funding for infrastructure projects in Asia will demonstrate increasing diversity.
“The large infrastructure investment needs in Asia will drive innovation in financing structures and lead to the increased use of different forms of credit enhancement,” says Terry Fanous, a Moody’s Managing Director.
“In fact, funding diversity is key to delivering infrastructure investment in Asia,” adds Fanous.
Moody’s analysis is contained in its report titled “Infrastructure &Project Finance — Asia: Growing funding diversity to bridge infrastructure funding gap”.
Moody’s report explains that infrastructure needs in Asia are large when compared to historical volumes of debt raised by state-owned and privately-owned infrastructure companies.
$1.7 trillion per year needed between 2016 and 2030
According to estimates from the Asian Development Bank, Asia will need to invest $1.7 trillion per year in infrastructure between 2016 and 2030.
Meeting those investment needs will require the mobilization of diverse sources of private sector capital to supplement public sector expenditure.
“Recent precedent transactions for Asian infrastructure projects indicate that institutional investors are strongly attracted to Asian infrastructure and project bond issuance, even those with long-term amortizing debt features,” says Ray Tay, a Moody’s Vice President and
Senior Credit Officer.
“Favorable investor appetite and constraints on bank lending are likely to lead to more corporate infrastructure and project bond issuance,” adds Tay.
“Increased deal flow will enhance institutional investor familiarity with the infrastructure sector in Asia, and diversity by sector, geography and credit quality will result in a more robust market.”
And, the involvement of multilateral development banks — including the provision of credit enhancements — can mitigate credit challenges such as political risks that constrain investor appetite.
Moody’s points that the infrastructure sector has attributes that are suited to institutional investors’ strategic objectives, such as long tenors that facilitate asset/liability matching, portfolio diversification and credit characteristics that are attractive to long-term investors.
Subscribe via Email
Asia Pacific’s passenger traffic drops 98,8% in April
Preliminary April 2020 traffic figures released today by the Association of Asia Pacific Airlines (AAPA) showed that international air passenger...
Thai parliament urged to pass record 1.9 trillion baht ($59.6 billion) stimulus bill
Thailand's Prime Minister Prayut Chan-O-Cha on Wednesday urged parliament to approve the kingdom's biggest-ever stimulus package to revive an economy...
Thailand hopes to produce COVID-19 vaccine next year
The vaccine, developed by Thai researchers, is an MRNA vaccine designed to help the body create immunity against the new...
CLMV’s economic growth crashes to two-decade low due to COVID-19
The COVID-19 crisis has caused the rate of economic growth in the CLMV bloc to be at its lowest in...
Zero New Covid cases and deaths in Thailand
Thailand reported no new coronavirus cases on Sunday May 24th and no new deaths, but the Centre for COVID-19 Situation...
Thailand extends state of emergency for another month
Thailand’s Centre for COVID-19 Situation Administration (CCSA) has approved the proposal of the National Security Council to extend the country’s...