Infrastructure debt became a belle of the ball in 2023, delivering a high cash yield for relatively low risk and attracting capital earmarked for fixed income and real assets, according to Nick Cleary, senior partner with Vantage Infrastructure. In an interview about how infrastructure debt performed through a year marked by inflation and high interest rates, published in the December issue of Institutional Investment in Infrastructure, Cleary compares infrastructure debt investments with infrastructure equity investments in today’s market and touches on the impacts of sovereign risk and energy transition. Infrastructure debt did provide a sound hedge against inflation.
“These benefits of essentiality and transaction structure provided a good hedge to increasing operating costs and a partial offset to higher financing costs,” says Cleary. “The capital-intensive nature of the asset class, however, means the change in interest rates has impacted the sector.”
