Infrastructure continues to be in demand among investors and BlackRock’s Erik Savi said those watching Latin America should turn their attention to Colombia as recent regulatory changes have thrown up new investment opportunities.
Speaking at the Asofondos Congress in Cartagena, Colombia, an event which gathers the country’s pension funds and leading investors, the group’s global head of infrastructure debt said:
‘Recent regulatory changes have created a more stable environment for investing [in Colombia] such as strengthening institutional support and framework, improving structuring and bidding processes and reducing esoteric risks of infrastructure projects.’
Among the most promising opportunities catching Savi’s eye is the Fourth Generation (4G) road expansion program, an ambitious program which includes 40 projects to build some 8,000 kilometres with a total investment of $25 billion during the course of the next 10 years.
Projects will be carried out under a Public Private Partnership (PPP) approach and will furnish a road infrastructure more suitable to the economic development of the country.
Addressing the broader appeal of infrastructure debt, Savi said investing in these kind of projects offers diversification from more conventional asset classes. In addition, many countries with stable economies are investing heavily in these types of projects over other opportunities.
‘The return expectations are anywhere from 3.5% all the way to 18% depending on where you are on the risk spectrum,’ said Savi.
He added: ‘We believe the proper way to play infrastructure is globally and across the credit spectrum, from low investment grade and including buying debt in projects located in countries in which you are buying sovereign and emerging market corporate debt.’