Perspectives from our analysis team on the markets, sectors and risks that shape how projects are assessed.
As policy rates settle above the pre-2020 norm, discount rates on long-duration assets have permanently reset. Infrastructure and real-asset sponsors that underwrote at compressed spreads are now refinancing into a materially different market. We expect valuation discipline — not leverage — to determine which projects remain resilient through the next cycle.
Margins in physical commodity trading are earned in logistics, documentation and counterparty selection rather than in directional price views. Tight working-capital cycles reward parties who can assess warehousing, quality risk and delivery timing accurately, and who document security over the cargo itself rather than relying on the counterparty's balance sheet.
Module and turbine costs have fallen far enough that the binding constraint on new generation is interconnection and offtake certainty. Projects with secured grid connection and creditworthy power purchase agreements remain deliverable; those advanced ahead of those approvals generally do not.
Spread compression across private markets has narrowed the compensation for illiquidity just as covenant packages have loosened. In our reviews we favour milestone-linked structures over arrangements that front-load disbursement, and we treat documentation quality as a core analytical question rather than legal overhead.
Brownfield sites offer location value at a discount, but remediation cost curves are non-linear and frequently underestimated at bid stage. Independent environmental assessment before commitment, and phased release tied to verified milestones, remain the two controls that most reliably protect the parties to these transactions.
Outcomes are asymmetric: an approach that avoids severe losses can afford to be modest in strong years and still perform better over a full cycle. Position sizing, correlation monitoring and pre-agreed exit thresholds do more for long-run outcomes than incremental gains in gross return.
The commentary published on this page is provided for informational and educational purposes only. It does not constitute investment advice, an offer, or a solicitation to buy or sell any financial instrument.