MainStay Mutual Funds
Retirement Plan Services
Originally published: 10/31/18.
Infrastructure—power generation and transmission, water management, highways, bridges, airports and seaports, railways, government facilities, hospitals, etc.—is vital to the function of any nation. Given the massive infrastructure needs globally, it’s no wonder that in 2013, New York Life formed a dedicated infrastructure investing group within the Private Capital Investors (PCI) team to actively seek infrastructure debt opportunities. Since then, we have invested over $1 billion every year in new infrastructure transactions.
"As a life insurance company, New York Life has long-term liabilities, and these infrastructure investments represent long-term assets. So investing in critical-need infrastructure projects with stable cash flows helps to match our assets and liabilities,” says Gail McDermott, head of PCI. "Additionally, this asset class offers great portfolio diversification.”
Everyone is wondering how we can improve our nation’s aging infrastructure. One answer could be to look at how other countries approach this issue. The UK, Canada, and Australia have all successfully used public-private partnerships (PPPs) to transform their infrastructure in efficient and effective ways.
A PPP is a contractual agreement between a public agency and a private-sector entity. Through this agreement, the skills and assets of each sector are shared in delivering a service or facility for the use of the general public, such as a road, bridge, railway, airport, or water system.
Our Infrastructure team knows firsthand how well PPPs work from its international investments. For example, they recently invested in a highspeed train in the UK. This involved overhauling a train line and refurbishing a major train station. The project was delivered on time and under budget, something that government agencies rarely achieve. The local users of the train were thrilled as commuting times were cut in half and traveling through the beautifully renovated station is much more pleasant.
In the US, the public-private-partnership model hasn’t gained traction yet. However, Colleen Cooney, who leads PCI’s Infrastructure team says, “Widespread adoption of the PPP model could be a game changer to infrastructure in the US, bringing innovation, time, and cost savings to vital projects. And there is no shortage of financing for these deals, as a tremendous amount of infrastructure-dedicated private funding is sitting on the sidelines waiting to be deployed. What we need are more investable projects."
A focus on green-energy investing
A good deal of the investments made by our Infrastructure team are made here at home. Lately, they’ve been active in the renewable-energy space, having invested more than $2 billion in bonds that helped build renewable energy production, including solar, wind, and hydro generation – enough to power millions of homes. And now that more states are mandating that a larger portion of their electricity originate from renewable sources, this kind of investing should continue to increase.
Recently, the team helped to finance the construction and operation of the largest solar project in Texas. On the wind-power side of renewable energy generation, the team invested in more than 50 wind farms and most recently helped finance a portfolio of four projects in Texas and Oklahoma totaling 710MW in generation capacity. Each renewable facility’s output is contracted to a highly rated local electric utility.
“Gail, Colleen, and her team have done a fabulous job sourcing infrastructure investments that provide both income and diversification benefits to New York Life,” says Tony Malloy, Chief Investment Officer. “With Infrastructure expected to be a priority for the next congress, our team is well positioned to add attractive investments to the portfolio.”
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New York Life Insurance Company
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Private Capital Investors is the private debt investment arm of NYL Investors LLC, which is a wholly-owned subsidiary of New York Life Insurance Company (NYL) – one of the largest mutual life insurance companies in the United States with the highest ratings for financial strength currently awarded to a U.S. life insurer. (Moody’s – Aaa, from Credit Opinion, July 2018. S&P – AA+, from Rating Report, Ju;ly 2018 . Fitch – AAA, from Rating Report, July 2018. AM Best – A++, from Rating Report, July 2018.) Note that New York Life Insurance (NYL) ratings are not NYL Investors' rating and that these ratings are based on the financial strength of NYL and apply only to obligations issued or guaranteed by NYL.