Infrastructure ETFs: Roadblocks Ahead?

 |  Includes: GII, IGF
by: Tom Lydon

The infrastructure sector should have been a shoo-in, but debt assessments may hinder infrastructure projects and related ETFs.

Despite global infrastructure promises, deals aren’t materializing and the infrastructure industry is discovering that money is still hard to come by, writes Richard Barley for The Wall Street Journal. According to researcher Preqin, a record 94 infrastructure funds are out seeking capital.

Up until 2030, annual requirements for spending on electricity, roads, rail, telecommunications and water will be around 3.5% of global GDP. Developed countries will need to monetize infrastructure assets by privatization or by tolling, while infrastructure projects will likely cost even more in emerging markets.

Some countries have generated projects large enough to produce enough new jobs to syndicate guarantees from the state government while some corporate infrastructure operators gained funding through bonds and private debt placements. A few developing countries have the benefit of strong domestic growth, which would support financing projects internally.

Sen. Benjamin L. Cardin has asked the Senate to invest more in domestic infrastructure, and has proposed a Water Infrastructure Financing Act to give more than $35 billion in funding for both improving the water supply and basic infrastructure, reports the Associated Press.

  • SPDR FTSE/Macquarie Global Infra 100 (NYSEArca: GII)


iShares S&P Global Infrastructure Index (NYSEArca: IGF)


Max Chen contributed to this article.