The infrastructure asset class experienced low and positive returns in the first quarter of 2024 led by the uncertainty regarding monetary policy in Europe and the United States that is keeping investors on their toes.

The infra300 index, a global unlisted infrastructure equity index comprising of 300 assets with a total market capitalization of USD 306 billion, has witnessed gradual ups and downs in Q1 2024, achieving a 1.52% return (local currency and equal weights) throughout the quarter.

The primary drivers of the index return in this quarter were the network utilities and transport sectors, with a return contribution of 2.93% and 3.05% respectively. infraMetrics also offers the return drivers by other TICCS pillars, namely Business risk, and Corporate Structure, which highlights regulated corporate companies to be the leading drivers of return in Q1 2024.

Equity valuations remained flat over the quarter as the macroenvironment remains uncertain. infraMetrics Valuation and Analytics data shows that the EV/EBITDA ratio of the global infrastructure market remained steady between January and March 2024 with an average ratio of 12.6. Weighted average cost of capital of the infrastructure companies increased by 30bps in this quarter and stands at 8.43%.

On the other hand, the debt index, Infra300 Debt, exhibited slightly more fluctuations in its return since January 2024. The index consists of 376 constituents, representing the newest debt instruments issued by companies belonging to the infra300 equity index, with a collective market capitalization of USD 98.86 billion. Following two consecutive months of decline, the index rebounded in March 2024, with a return of 1.32%, ending the quarter largely unchanged at 0.2%.

As central banks moved away from the hawkish monetary policy, credit spreads have continued a steady decline. Average credit spread of the global infrastructure debt market stands at 154bps, almost 50bps lower year-on-year. In comparison, yield-to-maturity has only reduced by 20bps over that period and stands at 5.5% as of 31st March 2024.