Winter 2016 / 2017November 2016
Infrastructure debt is an underinvested asset class with wider spreads and stronger default characteristics than comparably rated corporates. The sector is dominated by banks looking for lending fees but not cheap assets. This leaves an opportunity for investors to earn above average risk-adjusted returns.
Autumn 2016October 2016
As an asset class, infrastructure has specific characteristics investors can take advantage of when analyzing and managing their portfolios. When deployed within a diversified set of investments, the asset class has the ability to help investors significantly improve the overall risk-return efficiency of their portfolios.
Summer 2016May 2016
The Sharpe Ratio of Sequoia Economic Infrastructure Income Fund (SEQI), as a proxy of infrastructure debt, is calculated to be 0.82 vs equity at 0.35 and leveraged loans at 0.16. This shows 2.3x as much return per unit of risk as equity and 5.1x as much as leveraged loans. This is largely due to lower return variability of infrastructure debt vs infrastructure equity and lower returns for leveraged loans.
Spring 2016March 2016
Moody’s October 2013 study shows the pairwise asset correlations they use for rating structured finance transactions backed by infrastructure debt. Below are findings that pertain to Sequoia Economic Infrastructure Income Fund and other infrastructure debt fund strategies. Infrastructure debt also has less asset correlation than leveraged loans.
Winter 2015 / 2016December 2015
Global infrastructure ratings are only one-third as volatile as corporate ratings. During the financial crisis of 2007-08, the global recession of 2008-09 and the ongoing European sovereign debt crises of 2009-present, corporate downgrades were 6x as great as infrastructure downgrades. This shows that infrastructure ratings are much less susceptible to banking crises and economic downturns.