AIIB, concerned about investment slip, is willing to scale up

The Asian Infrastructure Investment Bank (AIIB) is concerned that a downward trend in project finance could continue as challenging economic and geopolitical conditions make investors more cautious, the bank’s vice president of policy and strategy Joachim von Amsberg said.

Potential infrastructure projects could be left unfunded as a result, although the China-backed multilateral lender was prepared to “scale up” in the face of tougher conditions, he said.

The AIIB earlier this month set up a $500 million fund for corporate bonds in a bid to boost the flow of private capital into infrastructure investments. 

It comes at a time of rising borrowing costs, growing geopolitical uncertainty and slowing economies, underpinning what the AIIB said was a likely decline in the value of market transactions for infrastructure last year after a fall in 2017 in eight countries it looked at.

Potential investors may harbor a range of concerns, from worries that slowing economies will lead to governments failing to meet contractual obligations, to concerns that trade frictions will erode the potential of infrastructure projects such as ports, von Amsberg said.

The AIIB expected a possible “flight to quality”, leaving some of the more marginal projects unfinanced.