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 Programs1:
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.
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.
1. Source: Bipartisan Infrastructure Investment and Jobs Act, as of 8/2/2021
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