Recent in-depth analysis by leading Australian investment manager QIC reveals that the effects of interest rate hikes on infrastructure are likely to be complex and diverse – even positive – depending on the circumstances of each market, sector and asset. 

The research responds to concerns that moves by the U.S. Federal Reserve to normalise monetary policy and raise interest rates, with the European Central Bank and Bank of England set to follow suit, will undermine the performance of investments, including infrastructure assets. 

In a new Red Paper titled, “The impact of higher interest rates on infrastructure: nuanced, not black and white,” QIC explores the dynamics of global macroeconomic and demographic trends, their interplay with interest rates, and the combined impact on infrastructure investments. Supported by named case studies, the study investigates: 

1. Forces acting against inflation

  • Automation and globalisation have not been beneficial for all, leading to heightened income inequality in the developed world that is, in turn, affecting economic growth and inflation.
  • Ageing demographics and declining population growth rates have lowered the economic growth potential of affluent countries.
  • Productivity growth has stalled due in part to the transition from manufacturing-based to service-based economies, where productivity growth is inherently slower.
  • The Chinese labour supply effect – adding vast numbers to the global market with labour stock – continues to inhibit inflation.
  • The confluence of these factors will hinder the pace at which interest rates rise, and likely stop them short of historic levels.
2. The various effects of rising interest rates
  • Rising interest rates don’t necessarily signal negative impacts for all infrastructure assets. 
  • The effects on investment performance are derived from changes to future cashflows or to discount rates.
  • The impact on infrastructure cashflows will depend on the impact on debt servicing and revenue, and could range from highly positive to highly negative. 


 3. The sector’s strong ability to manage interest rate risk 

  • As a provider of essential services, the infrastructure sector is highly durable, with typically strong cashflow stability enabling infrastructure assets to sustainably maintain relatively high debt levels.
  • In the global ‘hunt for yield,’ the infrastructure sector has allowed debt investors to access attractive yield through longer tenor debt, which has provided asset owners with the opportunity to de-risk.
  • Unlisted infrastructure asset owners and managers have an arsenal of tools to manage interest rate risks, from portfolio construction strategies to active management of capital structures including staggering debt maturities, reinvestment in assets, refinancing at more attractive borrowing rates, diversifying issuance across multiple capital markets, and proactive foreign exchange and interest rate hedging strategies. 

“It’s easy to have a knee-jerk pessimistic reaction to the end of negative interest rates and quantitative easing,” said Ross Israel, Head of Global Infrastructure, QIC. “But there are several factors to consider. Firstly, multiple pressures will likely keep official interest rates rising slowly and stop them short of historic levels. Secondly, the effects on infrastructure assets could be positive or negative, depending on a range of market and asset factors. And finally, the infrastructure sector is notably resilient, with a range of ways in which to mitigate risk.” 

Read more about QIC’s study The impact of higher interest rates on infrastructure: nuanced, not black and white here.

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About QIC:

QIC is a global diversified alternative investment firm offering infrastructure, real estate, private equity, liquid strategies and multi-asset investments. It is one of the largest institutional investment managers in Australia, with A$82.9 billion (US$65.0/£46.6 billion)  in funds under management, offering infrastructure, real estate, private equity, liquid strategies and multi-asset investment services. QIC has over 700 employees and serves more than 110 clients including governments, pension plans, sovereign wealth funds and insurers, spanning Australia, Europe, Asia, Middle East and the US. Headquartered in Brisbane, Australia, QIC also has offices in New York, San Francisco, Los Angeles, London, Sydney, and Melbourne. For more information, please visit:
About QIC’s Global Infrastructure business:
QIC is a long-term infrastructure investor with an established global platform. We currently manage A$9.6 billion (US$7.5 billion/£5.6 billion)  across 12 global direct investments, having realised a further A$7.3 billion (US$5.7 billion/£4.3 billion)  of investments for our clients. Our sector centric investment strategy deconstructs risk across sector value chains identifying relative value for investment. This drives a targeted origination approach which has seen us build diversified portfolios for our clients, protecting their capital while delivering strong total returns since 2006. 


For further information, please contact: 

Samantha Pankovas
BlueChip Communication 
T: +2 9018 8602
M: 0424 790 205


Caroline Gentile
CNG Consulting LLC
T: +1 917 692 5730

United Kingdom

Ben Welsh
Certus Communications Consultants Ltd
T: 07568 382040

QIC Limited ACN 130 539 123 (“QIC”) is a wholesale funds manager and its products and services are not directly available to, and this document may not be provided to any, retail clients.  QIC is a company government owned corporation constituted under the Queensland Investment Corporation Act 1991 (Qld). QIC is regulated by State Government legislation pertaining to government owned corporations in addition to the Corporations Act 2001 (Cth) (“Corporations Act”). QIC does not hold an Australian financial services (“AFS”) licence and certain provisions (including the financial product disclosure provisions) of the Corporations Act do not apply to QIC. QIC Private Capital Pty Ltd (“QPC”), a wholly owned subsidiary of QIC, has been issued with an AFS licence and other wholly owned subsidiaries of QIC are authorised representatives of QPC. QIC’s subsidiaries are required to comply with the Corporations Act.  QIC also has wholly owned subsidiaries authorised, registered or licensed by the United Kingdom Financial Conduct Authority (“FCA”), the United States Securities and Exchange Commission (“SEC”) and the Korean Financial Services Commission.
For more information about QIC, our approach, clients and regulatory framework, please refer to our website or contact us directly.
The statements and any opinions in this document (the “Information”) are for commentary purposes only and do not take into account any investor’s personal, financial or tax objectives, situation or needs.  The Information is not intended to constitute personal legal or investment advice and it does not constitute, and should not be construed as, an offer to sell or solicitation of an offer to buy, securities or any other investment, investment management or advisory services.
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