Allianz Global Investors (AGI) has reached a total of €2 billion in infrastructure debt investment a year and a half after establishing a team with senior debt expertise.
The milestone comes in the form of AGI’s eighth transaction, which is a €433 million investment in the A11 motorway in Belgium.
The transaction is the first listed construction-phase project bond in Belgium and uses the European Investment Banks’s Project Bond Credit Enhancement facility. The final maturity of the bond is 31.5 years.
Infrastructure is a developing asset class for institutional investors and has been traditionally dominated by banks.
It is an illiquid asset class and can take years to realise returns.
However, asset managers hope that liability-hedging qualities will tempt pension funds. AGI says infrastructure debt offers investors who have long-duration liabilities access to investments with matching long-term stable cash flows and risk-adjusted returns that are currently more attractive than government bonds.
Over the past year, AGI has completed eight infrastructure debt transactions across seven European countries.
AGI says it was one of the first global investment managers to establish a dedicated infrastructure senior debt expertise in September 2012.
Commenting on the milestone, Deborah Zurkow, CIO infrastructure debt at AGI, says: “We are pleased to have reached this important milestone as it provides concrete evidence that there is a real market opportunity for long-term investors to secure an attractive yield via illiquidity premia and credit spreads while offering the reliability of an underlying real asset.
“As the market develops and matures we expect to see significantly more institutional investor interest, which will help meet society’s need for substantial infrastructure funding.”
In November 2013, the Universities Superannuation Scheme made a larger allocation to infrastructure when it purchased a non-controlling stake in The Airlines Group.
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