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The Senate passed a $1.2 trillion infrastructure spending bill with bipartisan support, the largest infrastructure package ever passed by any part of Congress.  The bill now heads to the House where a vote is not expected until October. The infrastructure bill reauthorizes spending on existing federal transportation programs and adds an additional $550 billion into making the electrical grid resilient, supporting nuclear power generation, expanding broadband access, and other modernization objectives.

 

Key Additional Spending Programs ¹ :

• $110bn for roads and bridges
• $66bn for passenger rail (Amtrak)
• $39bn for public transit (buses, subways)
• $65bn for expanding broadband access to low-income households
• $65bn for improving the electrical grid (transmission to enable more renewables)
• $50bn to make energy infrastructure resilient to both cyberattacks and natural disasters
• $15bn to replace lead water pipes
• $7.5bn allocated to EV charging stations (500,000 planned)

 

Infrastructure Bill Passes the Senate – Largest Ever

Critical for the bipartisan agreement were no new taxes to pay for this package.  Instead, the plan includes repurposing existing COVID-19 funds, changing the fees on reporting requirements for cryptocurrency, delaying Medicare rebates, and funds from auctions of the wireless spectrum. 

 

Implications for Global Listed Infrastructure Market – Reinforces Secular Growth Themes

Listed infrastructure companies do not rely on government spending for investment in their infrastructure assets.  As a result, the spending bill has little immediate impact on the outlook for their cash flows.  Importantly, however, government policy and support for initiatives like decarbonization , asset modernization, and digital transformation , highlight the megatrend growth themes of the asset class.  We believe that the potential passing of the legislation by the House is a tailwind for the listed infrastructure companies.

 

Decarbonization:

• Power infrastructure is broadly supported with $73bn to modernize the generation and delivery of clean electricity
• Electrification of the transport sector with the support of a nationwide electric vehicle- charging network
• Key investment sector that may potentially benefit : Electric Utilities

 

Asset Modernization:

• Water-infrastructure and power-grid, directed spending for resilience and safety
• Key investment sectors that may potentially benefit : Electric and Water Utilities
  

 

Digital Transformation:

• Target of 100% high-speed broadband coverage across the U.S., increasing data penetration
• Key investment sector that may potentially benefit: Communications

 

Over the next two decades, we see indications for up to potentially $100tn in capital spending globally across infrastructure sectors, which should potentially drive robust cash flow, dividends, and total returns for investors.