A number of asset classes, including listed infrastructure assets, have benefited from the global search for yield that has taken place following a collapse in short and long-term government bond yields. But what if the positive tailwinds of low interest rates and inflation start to reverse? Whilst the current consensus is that monetary policy stimulus will be removed at a very gradual pace, it is important to acknowledge that a sharp rise in inflation may see a policy response in the form of much higher interest rates. Listed infrastructure companies are generally viewed as being highly sensitive to interest rate rises given they generally carry more debt than other companies.
To discuss the impact of higher interest rates, this week on BVTV I’m joined by Fund Manager Alex Araujo for a quick-fire round of questions on listed infrastructure assets.