Unlisted infrastructure debt is a relatively new asset class for many investors. It may offer consistent and competitive risk-adjusted returns in today’s low-interest-rate environment, with potentially low correlations to other asset classes. Manager research data show higher recovery rates for infrastructure assets compared to non-financial corporate bonds. But competition from new debt providers has increased demand for good assets, putting upward pressure on pricing and leading managers to expand their definition of targeted assets and acceptable financing structures. It is important to work with experienced lenders that can conduct detailed diligence and build a diversified portfolio.

Before the global financial crisis (GFC), traditional banks were responsible for nearly 90 percent of infrastructure debt finance. But regulations issued in the wake of the crisis limited the ability of banks to provide these loans, notably for longer term financings. Private plac