Hicl Infrastructure Share Discussion Threads

[spoole5] 28/9/2022 08:29

May as well have 75% VWRL 25% cash!

[jonwig] 28/9/2022 08:26

"Diworseification"?

[spoole5] 28/9/2022 08:23

This just goes to prove how much of a waste of time diversification is, supposedly safer, non correlated assets treated like equities. May as well go 75% equities 25% cash.

[williamcooper104] 28/9/2022 01:14

Yep - all non-recourse So like with those transport projects that got into covid trouble the downside was limited And non-recourse is upside in a downside in that there's always the possibility of buying discounted debt

[williamcooper104] 28/9/2022 00:57

Pension funds who've got inflation/LDI swaps have to cash collateralise their positions Because we've had extreme movements they've to find more collateral Thus they've been panic selling Wonder if this accounts for some of the moves in higher quality infra assets over last couple of days (clearly gilts plays a big part too)

[williamcooper104] 28/9/2022 00:55

Pension fund crisis as gilt yields climbhttps://www.thetimes.co.uk/article/fd0cb270-3e96-11ed-a7af-c587dcb7526e?shareToken=5011ee068b8754cbfc1fab5d681dedeb

[topvest] 27/9/2022 19:53

Alan PT - fortunately, I am waiting to take an annuity on the non-defined benefit element of my pension scheme which I moved to money market funds 6m ago. Some much better deals are starting to appear, but they haven't been re-priced for the last week yet.

For what its worth, I think the FED (and all other following central banks like the BoE) will raise rates aggressively to c5% and then quickly resort to a u-turn to prevent a massive recession as inflation reduces. The window for getting a top rate could be smaller than we think. Watching very closely.

Could be some good buys in property and infrastructure soon - astounded by the indiscrimate falls in the last few days.

[jonwig] 27/9/2022 17:08

Yes, and non-recourse we assume.

I've just been commenting about SEIT - net cash consolidated but 34% debt:assets on a see-through basis.

[williamcooper104] 27/9/2022 17:04

There will be lots of debt in the project companies But that ought to be project finance, fully or almost fully amortising, fixed rate/hedged - will be massive positive mark to markets on swaps too

[williamcooper104] 27/9/2022 16:58

All depends on individual circumstancesBut I suspect that for the first time in 15 odd years it's worth having a look at

[alan pt] 27/9/2022 16:19

Slightly off topic, but all this makes me wonder whether it might actually become sensible and cost effective to buy an annuity at some point

[jonwig] 27/9/2022 16:02

But its accounts mask any debt in the underlying operating companies, as with HICL. (I don't know INPP.)

[williamcooper104] 27/9/2022 14:35

Just double checked Seems INPP has net cash and no drawings under its corporate debt facility So unless I am mistaken - and I could be - it should have little to no exposure to higher interest rate costs

[alan pt] 27/9/2022 13:08

HICL faring a little better than INPP which has been really hammered today, now on about a 12.5% fall since Friday, I have been buying today

[jonwig] 27/9/2022 11:52

A good, clear explanation - thanks!

[alan pt] 27/9/2022 11:45

Nice article here on how various infra trusts are potentially affected
hxxps://citywire.com/investment-trust-insider/news/discount-rates-why-are-infrastructure-funds-falling/a2398279

[kaffee] 27/9/2022 05:30

Thank you all.

[williamcooper104] 26/9/2022 20:09

Yep - if you want safe you need to have a gilt with a short maturity; long gilts can get smashed up easily; ideally a maturity for roughly about as long as you intend to hold it for Have a look at the 2068 index linker from 330 to 90 in not much over a year

[williamcooper104] 26/9/2022 20:06

You can buy direct but large min sizes Probably best way is through an ETF - very low costs

[alan pt] 26/9/2022 18:58

Also plenty of bond funds and trusts, maybe a safer option if you don't have a lot of knowledge of the area. Everyone keeps talking about yields vs "safe" gilts, but safe is a relative term, especially at the moment!

[jonwig] 26/9/2022 18:39

kaffee - find the code and buy through your broker. Here's the search list, the names begin with "Treasury":

[kaffee] 26/9/2022 18:11

I'm sorry for this daft question... how do I go about buying gilts then? Are they wrapped in a fund ?

[williamcooper104] 26/9/2022 12:08

FWIW - I think gilts have further to fall but the fall is so extreme that it ends with a 192/ coup and the reversal of the Fiscal Event; which then ought to bring back a bit of sanity - but that's crystal ball stuff and may well be over-estimating the intelligence of the current Conservative Party

[williamcooper104] 26/9/2022 12:06

Yep - need to check what's outstanding on the corporate debt facility (but will be low relative to overal debt stack) that ought to be the only exposure to rising interest ratesOf course rising bond yields will bring down NAV but shouldn't impact materially cash flows Actually there's two positives One - HICL from memory had short term inflation at about 6 and then falling quickly - the pound collapsing will see to that Plus there's loads of reserved cash at project level SPVs - they will soon actually get a proper interest return

[ec2] 26/9/2022 12:05

I sold most of my holding today off the back of rising gilt yields reducing the difference between risk free gilt rates and the yield on HICL. I appreciate the HICL div should be index linked but it's not risen in the last three years and the board is guiding for the div to remain unchanged through to y/e 2024. Div cover only 1.05x. Reinvested half the proceeds into GCP for the 7pct yield. Still hold INPP in this space where there is a clearer path of rising dividends going forward and greater correlation with inflation.