Chris O’Dea take a look at the private infrastructure debt space and used EDHECinfra spread data to make his point.
“An EDHECinfra study compared the yield spread over short-term risk-free rates for each type of infrastructure debt, using its universe of about 2,300 debt instruments over a 20-year period (see figure). Project debt has recently reached a plateau at about 200bps over the risk-free rate, while debt of corporate infrastructure entities such as utilities yields less.
Corporate debt is also largely investment-grade, while project finance debt can be well below investment-grade, says EDHECinfra director Frédéric Blanc-Brude. In the EDHECinfra sub-indices, he says, 98% of corporate infrastructure debt is investment-grade compared with only 89% of project debt, while project debt has a duration – the sensitivity of the debt value to interest rate changes – and value-at-risk that is a bit higher than corporate infra debt.”
Read the story here.