Macquarie International Infrastructure Fund

[Nick]

I met them last year. After I attended the briefing, quickly sold my shares...

I met the Management back in 2005. Same result, also immediately sold after that meeting.

Same trigger, same action, but different outcome as different time frame.

2005 : Assets mainly in Europe and Australia, mostly held thro' Macquarie-run funds. Highly geared, that's why badly hit in the subsequent financial crisis. back then, I didn't dare to hold on to MIIF for long term, at most, trade before and during cd period.

2011 : Assets mainly in China and Taiwan. Cash rich but assets are >50% geared. I was collecting quite a lot as the yield was too attractive to resist (I thought I knew the risks). Quite an experience to see it drop below 50ct but equally surprised to see it rebound back to ~60ct. With 2 DPUs collected (total 5.5ct), easily 15%-20% returns (more if you managed to buy below 50ct).

So, ya, right decision in 2005 as you'd have saved yourself from a big loss. But, for 2011, at this point in time, still not considered that good a decision.

There are 2 major issues for MIIF at the moment -

1) Resolving the tax issues in TBC

2) The potential toll rate cut in HNE. If toll rate is cut and no compensation is paid, it will be really negative for MIIF as cash-flow will decline despite higher debt amortization in the years to come.

For me, the main issue is that TBC debt repayment will be rather substantial from 2014 ($100M+ per year) onwards and I don't have any idea how it'll affect their DPU payout. I'd posted before that I planned to exit before 2014..

I guess they will refinance it again ? You are right about the under-lying leverage. One of the reason why I steered clear from MIIF and Cityspring despite the resilience of the operating business. Unfortunately, there aren't many infrastructure yield stocks listed here (4 i think) so the choices are limited.

http://info.sgx.com/listprosp.nsf/6c6be9...6003268bf/$FILE/MIIF%20-%20AR%202011.pdf [MIIF 2011 AR]