Infrastructure is akin to the chorus in the 1920s song: “I Scream, You Scream, We All Scream for Ice Cream.” More is always better, at least in the eyes of public officials. Networks and terminals can drive growth and bolster productivity. The problem is the cost of these projects, often built with cost overruns at taxpayer expense. Public-private partnerships can mitigate some of these problems, but the popular financing structure is not a talisman against excesses, or even corruption.
Masterplan Advance delves into infrastructure from an investment perspective. We offer thoughts on marquee opportunities in solar power, seaport development, and broadband networks. We look into public-policy issues in the dominant American and Chinese economies. If infrastructure is the new portfolio alternative, then investors should evaluate these deals with the same degree of scrutiny as other real assets.
The lyrics continue: “Oh, spumoni, oh, cartoni. And confidentially, we’ll take baloney!” It is the folly that should worry portfolio managers. Investors replace sovereign debt with infrastructure bonds because of higher yielding features. But those commitments can harbor risk, despite the ease with which many dismiss the downside.
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