Western Asset Management is launching what is believed to be the first infrastructure fund to focus primarily on publicly traded debt.
The move comes amid rising interest in the asset class with cash-strapped western governments and banks increasingly struggling to finance infrastructure projects, while investors such as pension funds are said to be eyeing up the long-term, inflation-linked, stable returns infrastructure debt is reputed to offer.
“There is a current, and more importantly projected, need for infrastructure spending that cannot be met through public sector spending or by the traditional route of bank financing,” said Mike Zelouf, head of Europe, Middle East and Africa at Western Asset, who cited official estimates of a need for $15tn of funding for projects in the EU, US and Asia by 2020.
“We have talked to investors, including a large number of FTSE 100 companies’ pension funds. A lot are looking at infrastructure,” he added.
Houses such as Allianz Global Investors, Legal & General Investment Management, BlackRock, AMP Capital and Hadrian’s Wall Capital have launched infrastructure debt funds focusing on private loans.
The Legg Mason Infrastructure Debt Fund, managed by Western Asset, a subsidiary of Legg Mason with $460bn AUM, will target publicly traded bonds.