It has been a tumultuous week in the financial markets. It’s not the first time, and most certainly not the last time, that risky assets such as global public equities have seen such extreme short-term volatility. But it also serves as a reminder that asset classes such as renewable energy infrastructure are insulated from whipsaw action. At CleanCapital, we own and manage projects that deliver steady cash flows, underpinned by the long-term contracted sale of a basic necessity to our customers. We’ve known for some time that cumulative default rates for Infrastructure and Project Finance are significantly lower than for NFC (non-financial corporates); 1.83% vs 3.45% in the 2006-2016 period according to S&P Global Fixed Income Research. However even equity investment delivers highly predictable cash flow with annualized distributions usually within 1-2% of expected projections.
These assets have proven technology, limited operational risk, long-term residual value upside and broad-based political and regulatory support, particularly at the state level. This week has been business as usual for CleanCapital—we’re paying attention to the broader markets but marching along to deliver steady value for our investor base.