Infrastructure debt is now an established alternative asset class. While it broadly refers to the debt component of an infrastructure asset’s or company’s capital structure, it is by no means homogeneous, with the market covering a range of sub-sectors and risk profiles.
PATRIZIA specifically targets transactions generating spreads of 400 to 600 basis points, known as the “high-income” segment. Such investments are typically subordinated to senior debt, have a BB/Ba rating profile and issued by the private holding companies (“HoldCo”) of infrastructure assets.
In a relatively short period of time, private, high-income infrastructure debt has matured considerably as an investable asset class. Its appeals are by now well established – it tends to exhibit low volatility backed by stable long-term cash flows, lower default risk versus broader corporate credit, typically robust inflation insulation, and favourable portfolio construction benefits. Additionally, the current uncertain yet pessimistic economic backdrop plays to its cyclical resilience.
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