The organization “In the Public Interest” reports that global equity investors are gearing up for Trump’s infrastructure plan.
Question: if the banks own bridges and tunnels, can they put fees on them and raise fees whenever they want? They don’t invest for sentiment. They expect a return on investment.
“National: The Trump administration is launching its infrastructure plan with a series of high-profile events this week, beginning at the White House today with a call for privatization of the nation’s air traffic control system. On Wednesday, President Trump goes to Cincinnati for an event that “will highlight the locks, dams and other elements of the inland waterways system crucial for moving agricultural products and other goods,” and promote commercial fees. On Thursday, Trump will host mayors and governors at the White House for an infrastructure “listening session.” On Friday Trump will visit the Department of Transportation’s offices “to discuss its efforts to streamline the regulatory approval and permitting process for road and rail projects,” according to former Goldman Sachs president and COO Gary Cohn, Trump’s point man on the initiative.
“Although the outlines of Trump’s plan have yet to be spelled out, at the heart of the proposal is a dramatic cut in federal infrastructure funding, and for shifting the burden onto states, localities and the private sector.
“However, on May 25 the board of the American Association of State Highway and Transportation Officials (AASHTO) agreed on a policy resolution reflecting concerns about what the Trump administration has in mind for the framework for this shift. On private financing, AASHTO declared that “while opportunities exist to expand private participation in the provision of infrastructure,” the administration and Congress must “recognize that most transportation projects do not generate a revenue stream and therefore requires federal support in the form of direct funding rather than financing incentives that encourage borrowing or utilizing private capital.” This point goes directly to the issue of whether the administration’s so-called “asset recycling” model is sustainable.
“AASHTO insists that the focus of federal support should continue to be on transportation infrastructure needs, rather than on a turn toward support for energy transmission lines, rural broadband, and other non-transportation needs, as the administration has outlined. AASHTO is also concerned that the new framework might upend current transportation funding and project selection practices and safeguards, and advocates that “the existing federal program structure including highways, transit, and rail be utilized since it would enable investments to flow to every area of the country.”
“AASHTO also called for continued federal support for last year’s FAST Act transportation package (which “has provided near-term funding stability and relief to states”) and that, “at a minimum, the infrastructure package addresses the funding shortfall in the Highway Trust Fund with a long-term and sustainable revenue solution.”
“National: Private equity is gearing up for Trump’s private finance-heavy infrastructure initiative. The Australian funds manager AMP Capital announced on Thursday they’ve hired Brent Tasugi, a former senior vice-president at Oaktree Capital Management, to its New York-based infrastructure equity team. “Tasugi, who will serve as an investment director for AMP, spent nearly three years at Oaktree, joining the firm in August 2014. He was responsible for the origination and execution of North American transportation, logistics and public-private partnerships, working on projects including the Luis Muñoz Marín International Airport in Puerto Rico and Oaktree’s investment in Lonestar Airport Holdings.” [Sub required]. Any expansion of the ‘public-private partnership’ model in U.S. infrastructure in future years would witness the growth of a private speculative market in once fully-public U.S. assets.
Oaktree recently flipped its interest in the privatized Puerto Rican airport, selling its 50% stake to Canada’s Public Sector Pension Investment Board and a Mexican airport operator, Group Aeroportuario del Sureste (ASUR), which already had a 50% stake in the airport. [Sub required]
“National/International: China’s $810 billion sovereign wealth fund is also gearing up to invest in Trump’s infrastructure initiative. China Investment Corporation has officially launched its representative office in New York “to leverage the city’s strategic position as an international finance centre. The team will be responsible for conducting research on the North American economy, financial markets and policies, as well as strengthening cooperation with the fund’s business partners, CIC said in statement.”
For links, go to the website of ITPI
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