Investors have reacted positively to the European Union鈥檚 call for greater transparency on infrastructure lending.
, the European Commission threw its support behind a number of proposals to encourage long-term financing by institutions other than banks. The Commission argued that member states should publish infrastructure investment plans and ensure credit information on infrastructure loans is readily available in a central database.
David Cooper, executive director for European debt investments at IFM, welcomed the directive.鈥ㄢ�淚t鈥檚 absolutely what鈥檚 needed in my view. Infrastructure debt is a great asset class but it鈥檚 sometimes hard to evidence that statistically.鈥�
More data, Cooper said, would help institutional investors understand the sector鈥檚 risk and return profile.鈥� From his time in the UK banking sector, Cooper said the exchange of infrastructure loan data had led to greater understanding of the sector鈥檚 risk profile among lenders. Produced annually since 1983 by Moody鈥檚, the rating agency鈥檚 Default and Recovery Rates for Project Finance Bank Loans sees a consortium of banks pool information on an anonymous basis. The global study reviews data from 4,425 projects, which account for some 54.2% of all project finance transactions originated since 1983.
Cooper believes similar measures for the institutional sector would be advantageous.
More transparency in the infrastructure loan market has previously been , which in January suggested the European Investment Bank should help in assessing projects.
The Commission said it would evaluate the feasibility of 鈥渃ollecting and, where possible, making available comprehensive credit statistics on infrastructure loans and setting up a single-point compilation of project bond issue data鈥�.
Macquarie, which was recently by a UK pension scheme for a new inflation-linked debt fund, said it welcomed any initiative that helps 鈥渞id barriers to pension fund investment in infrastructure鈥�.
Andrew Robertson, head of investor structuring and strategy, Macquarie Infrastructure Debt Investment Solutions (MIDIS) said: 鈥淭hese initiatives, focused on transparency and data quality, together with the launch of pooled fund solutions, will be important enablers for the broader participation of pension funds in the infrastructure debt asset class and will ultimately help drive growth across Europe.鈥�
Lazard Asset Management鈥檚 Global Listed Infrastructure Fund portfolio manager, Warryn Robertson, said disclosure and transparency across the sector did need improvement.
鈥淚nfrastructure is where REITs were 20 years ago 鈥� so improvements to disclosure and transparency could be made and it would be good to see more people buying into that鈥�.
