Emerging Infrastructure Debt financing - risk characteristics

Impact investing

If the risk characteristics of Private Debt suit your investment style,
then project finance debt financing in Emerging Markets could be your next great find.

Emerging Markets Debt

Infrastructure financing

Opportunities for Emerging Infrastructure Debt financing, instead of Development Bank Finance. Project based lending offers signifiantly higher recovery rates, than in other sub investment grade sectors.

Project financing in EM are often underserved markets offering experienced deal teams attractive opportunities with substantial margins;
The cumulative expected loss for EM infra debt in middle- and low-income countries declined to 1.1% in 2020, similar to the 1.1% expected losses of an A-rated security.
According to the Moodys project finance default study (2021) and analysis from the Global Infra Hub Monitor report (2022), Infrastructure debt recovery in middle and low-income countries is slightly higher (84.3%) than in high-income countries, attributed tohigh levels of guarantees that ensure recovery if a default occurs.
Non-recourse project finance structures typically provide predictable and contracted cashflows with enhanced monitoring and controls for lenders.
The credit assessment process of project financing offers a relatively standardized format.
EM Infra Debt is scalable.

Source: Global Infrastructure hub: : https://online.flippingbook.com/view/929269454/9/)

WEBINAR

Resilience of Infrastructure Debt in Emerging Markets

With ImpactA Global, Global Infrastructure and Africa Infrastructure Development Association (AfIDA).

Replay: (on Vimeo):: Webinar replay - Vimeo

About Emerging Infrastructure Debt financing by Redington

• https://redington.co.uk/emerging-market-infrastructure-debt-a-sizeable-funding-gap-fitting-for-private-investor-participation/

The Private Debt strategy of ImpactA Global is focusing on Project financing/ Infra Debt asset financing in Global South. These assets are contractual long-term cash flows, secured by infrastructure assets with a geographical distribution of approx 50% to Latin America, 50% to Africa and up to 10-15% South East Asia.

Key terms:

FX: USD
Character of the loans: Mainly floating rate and amortising loans with little refinancing risk.
Rating of the portfolio: BB or possibly higher, if a first loss tranche or other portfolio guarantees are added
Expected loss is [2.5%]
Portfolio [650-850 bps] (approximate gross return)
Expected return: [10%*] net to investors
Duration: 10 years fund, of which avg life on the portfolio of 6-7 years. Underlying transactions mainly in 5-7 years to final maturity.

Please note, the information provided here is intended for guidance only. We strongly encourage you to review the specific terms and conditions, as well as the risk-return profile, relevant to your situation for a comprehensive understanding.