In 2014, the town of Flint, Michigan, was besieged by a state of emergency – as a result of lead-tainted pipes contaminating the water supply of its 100,000 residents. Embodying the challenges U.S. infrastructure projects face when seeking capital for upgrades, the Flint crisis could be followed by further catastrophes if critical utility repairs are not completed.
Writing for FTSE Global Markets, Trevor D’Olier-Lees, senior director, global infrastructure ratings, S&P Global Ratings, discusses the growing interest in bundled infrastructure assets, which could help to ease capital flows for infrastructure projects. In D’Olier-Lees’s view, the concept of bundling –combining assets into a single product for the purpose of selling as a single unit – can help to attract a wider pool of both contractors and investors. And this could unlock new sources of long-term financing from capital markets.
For D’Olier-Lees, the U.S. water industry may be the biggest beneficiary from bundling. He writes: “America’s fragmented water industry’s progress in securing the required financing for infrastructure upgrades has been stifled by bottlenecks. In this respect bundling is a potential means of financing the required utility works more economically, to a better standard and with a faster delivery time. And this could be a major step in preventing another water crisis on the scale of Flint in the future.”
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