HSBC Infrastructure Fund - New Rating

By ROBERT HARLEY 01/03/2006

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A LSE listed Guernsey Investment Company, with an unlimited life, investing in the equity tranche (subordinated debt and ordinary equity) of public sector backed infrastructure project companies. The company is managed to provide a steady income whilst at the same time time attempting to protect the principle from capital erosion. The initial yield is estimated to be 5.75% p.a, approximately 50% of the underlying cashflows are eligible for RPI indexation. The HSBC management team have been investing in this market since 1997 and on a funds basis since 2001. The underlying projects are being sourced from an existing HSBC Infrastructure fund that financed infrastructure project companies through the construction stage. These projects are now either operational or close to being operational, consequently they are now expected to generate high and predictable cashflows. Where possible operational risks and residual risks have been minimised through sub contractual and other agreements. Due to the long-term nature of the underlying contracts the portfolio is likely to have longer duration characteristics. The company has been awarded a 3 star rating.

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Source: Financial Express