by Val Cipriani, Investors Chronicle, November 28, 2024:
Infrastructure investment trusts have seen their discounts to net asset value (NAV) widen, as higher government bond yields in the US and in the UK once again delay a potential recovery.
The Association of Investment Companies’ infrastructure sector’s average discount reached 18.6 per cent on 25 November, up from 14.5 per cent on 30 September. The discount on renewable energy infrastructure trusts rose from 19.8 per cent to 27.1 per cent over the same period.
Both sectors are deeply interest-rate sensitive, and the Bank of England chose to make its second rate cut of the year in November should, in theory, have been good news. James Carthew, head of investment companies at QuotedData, said the infrastructure trust sector should be rallying now that base rates are falling.
But these trusts have struggled over the past two months as government bond yields jumped in the US and in the UK, partly as a result of the election of Donald Trump and the UK government’s Autumn Budget. “Government bond yields are rising in the UK and US as investors fret about whether inflation has been tamed and whether governments can rein in spending,” said Carthew.
Read more here