Just as low interest rates have had a positive effect on bank lending in project finance, a future hike could see institutional investors picking up the slack, says Mike Wilkins, Managing Director of Infrastructure Finance at Standard & Poor’s. In a recent interview with InfraDeals he explains that previous low interest rates have meant banks have been able to fund themselves at historically low cost, meaning there was ample liquidity in the market, helping to increase lending to infrastructure projects. But with a rise in interest rates on the cards bank lending will become more constrained, meaning infrastructure investment will have to be sourced from elsewhere – primarily from pension funds and insurers.
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