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Babcock & Brown: the debt market is recovering

The debt markets for infrastructure have turned a corner, the CFO of a major infrastructure investor said today at a conference in New York.

Financing for infrastructure deals is available, according to Jonathon Sellar, chief financial officer of Babcock & Brown Infrastructure, who spoke today at a conference in New York.

“I think we’re starting to see signs of the debt market recovering,” said Sellar. “There is a tightening but not total constriction of liquidity.”

Sellar made his remarks today at the Macquarie Global Infrastructure Conference. Australia-based Babcock & Brown Infrastructure is a specialist entity which focuses on acquiring, managing and operating infrastructure assets in Australia and internationally. The firm’s current portfolio is diversified across two asset classes: transport and energy transmission and distribution.

“Eventually, the liquidity is going to start to return,” Sellar said. As a sign that this process is beginning, he pointed to the hybrid equity market in Australia which, after being closed for six months, is once again becoming active.

Banks are looking for stable and predictable cash flow, said Sellar, noting that infrastructure assets in particular tend to produce this stability.

Although valuations of infrastructure assets have come down a little, they have not “fallen off a cliff”, said Sellar. As the market participants see valuations in the asset class hold up, Sellar said he expects bank confidence to increase.