7 February 2017
Queensland wholesale electricity prices have had an incredibly strong start to the year with the combination of higher demand (LNG facilities + hot weather) and concentration of ownership amongst generators driving very high price outcomes. The pool price averaged approximately $200/MWH for the month of January. However, it is important to recognise that this high average was acheived through very extreme prices at particular points in time - most notably in the late afternoon.
1 November 2016
Last week Tesla made a number of new product announcements including solar tiles - that is solar PV integrated into glass roofing tiles. These are not yet available for purchase and the exact technical specifications (or cost) remain unclear. In my view, the more significant announcement was the doubling of the capacity of the Powerwall from 6.4 kWh to 13.5 KWh.
11 April 2016
This month the IMF has warned that the world is facing the growing risk of economic derailment with the worst monthly collapse in Chinese exports since 2009. In February 2016, China’s exports fell 25.4% from February a year earlier. Historically, outside of recessions, trade volumes have tended to rise significantly faster than GDP (see below). The orthodox view of port investment has been that trade volumes will grow at a significant multiple of real GDP growth (typically a 1.5 – 2x multiple is adopted). Since the GFC, ports have been hit with a double whammy of poor GDP growth and low trade elasticity. While some would hope that recent sluggish trade performance is more cyclical than structural, our view is there are legitimate reasons to be less sanguine and have an expectation of lower volume growth over the next decade than was enjoyed during the boom-time for trade of the late 1990s and early 2000s.
31 March 2016
While it is a little late in the year for making forecasts and predictions – we at Infradebt thought we might float a potential “X factor” for Australian infrastructure investors. While most investors are focused on the potential implications of a hard landing in China, fallout from the end of the mining boom, or the potential impact of a rise in long-term interest rates – we wanted to float a risk that perhaps isn’t in the forefront of investors’ minds. What if Malcom Turnbull announced a plan for the Commonwealth to fund the construction of high speed rail from Melbourne to Brisbane? At the outset, before we even mention the risk, let us say this is not our base case … but it is possible. What would it mean if it did happen?
14 January 2016
Further to our September 2015 newsletter article on China, the following chart shows the latest annual coal import data for China.
12 January 2016
Further to our article on port volumes back in September - the data over the following three months has confirmed the extent of the downturn in trade in Asia. Irrespective of broader economic performance - seaborne trade is definitely experiencing a recession.
21 December 2015
While the COP21 declarations represent an increase in the level of global consensus to combat climate change and the two big impacts of this for infrastructure investors are likely to be on coal exports (negative) and renewable energy infrastructure (an opportunity) – there is very little in terms of specific actionable immediate changes in policy.
15 December 2015
At the risk of saying we told you so, the last quarter has seen the declines in the US junk bond market move beyond the energy sector. In late 2014 concerns within the high yield market were largely focused on the energy sector. The collapse in oil prices was hitting US shale oil operators hard. Today, concerns are much more broadly based, with rising pockets of distress in most sectors.
21 August 2015
For those interested in the ports sector, there have been a few interesting developments over the past few months. Shipping rates – the price charged by shipping lines for transporting cargo – have fallen sharply. Falling shipping rates is a symptom of a shortfall of demand. As a further example of this, see below for the annual growth in container throughput at the port of Singapore (an incredibly important hub for shipping in Asia). Container volumes are falling sharply through 2015 – with July volumes 13% below the corresponding month in 2014.
27 February 2015
Update on the impact of Basell III changes on the Australian term deposit market.
18 December 2014
This article looks at the Australian bond and loan universe – exploring various issues relating to infrastructure debt, in particular: its size, composition, structure and competitive dynamics, together with investment opportunities.
7 August 2014
The Insto Report comments on the disappearing illiquidity premium in recent infrastructure equity transactions and the merits of infrastructure debt.
6 August 2014
Tony Boyd discusses recent infrastructure performance. Includes a discussion of whether electricity generation assets should be considered infrastructure.
28 July 2014
The Australian Financial Review reports on AGL’s $200M profit downgrade due to the carbon tax repeal. This profit warning highlights the fragility of both the conventional and renewable power generation sectors, neither of which should be classified as infrastructure.
20 March 2014
The Insto Report comments on the dominance of the big four banks and the opportunities available for investors to capitalise on favourable deal terms in the private debt space.
17 February 2014
The investment magazine discusses the future role of super funds in joining the big four banks as a major lender to Australian corporates.
18 November 2013
Infradebt’s CEO, Alexander Austin, compares the high $5.1B price tag paid for Port Botany and Port Kembla to past port transaction multiples.
23 April 2012
The big banks have started selling syndicated corporate loans for the first time, seeking to relieve funding pressures and tap the $1.4 trillion super fund sector's rising appetite for fixed income.