(Bloomberg) — Europe's pensions and insurers, seeking returns in infrastructure deals after asset purchases by the European Central Bank gutted yields on bonds, say they're being crowded out again.
Their frustration is directed at the European Investment Bank (EIB), a public lender tasked with attracting private money to help finance construction projects like London's transport network or a giant lock in a Belgian harbor. The bank, owned by European Union governments, provides guarantees and junior debt to make investment less risky, which is great for private investors. But the EIB has another role — keeping financing costs affordable for taxpayers — and that's where public and private interests start to clash.
"Some of the infrastructure financing by the European Investment Bank has been allocated to projects that already received a lot of interest from private investors," Holger Kerzel, head of equity portfolio management at MEAG, Munich Re's asset-management arm, said in an interview. "The EIB crowded out private investors instead of supporting them."
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