Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
Before you point out that rivers do usually tend to flow towards the sea, consider Russia, whose great rivers flow south to north, ending up in the Arctic Ocean. Russia's rivers are not much help for transporting westbound the minerals of Siberia.
China's rivers flow west to east, emerging in the China Seas. This means that they are perfect commercial arteries for helping with the economic growth of the inner provinces.
On the banks of the Yangtze are metal and power facilities, power, chemical, auto, building materials and machinery industrial areas, and high-tech development zones. The stats say that the area accounts for 41% of China's GDP and 23% of population and makes 36% of the country's steel, 28% of petrochemicals and 47% of its automobiles.
In the past, the Yangtze river has been synonymous with catastrophe. After the three gorges, the river hardly drops in altitude as it flows to the sea. The flood plain is enormous, and three times in the 20th Century, there were floods killing over 100,000 people.
Tom Lau, took delegates up the 6,000-kilometre river at Macquarie's Infrastructure Conference in Singapore. He works for PYI Corporation, which develops, owns and operates ports along the Yangtze.
"There are 23 ports on the Yangtze, he said, "And 95% of the port assets there are still state-owned."
This scenario contrasts with listed port assets worldwide, which have been snapped up by infrastructure funds to the extent that few now remain on the stock markets.
From 2004 to 2006 cargo throughput on the river rose from 730 million tons to 870 million tons. 2007 is forecast to herald a further increase to 1 billion tons, and that is projected to rise another 30% next year.
Nine-tenths of that is bulk cargo, and the remaining 10% containerised, most of which only goes to the end of the delta at Jiangsu. Whilst China in general is an exporter, that paradigm is reversed on the Yangtze. 95% of goods are inbound freight. That then is the echo of the great sucking sound that China is making on the world's commodities. Coal, iron ore and building materials in quantity are all going west - up the Yangtze.
It is much easier to take building materials inland via the river. Five times as much is dispatched by river rather than by railways.
The river is deeper in the delta area and can accommodate 70.000 DWT ships, meaning Panamax-sized vessels and half-loaded cape-sized carriers. By the time you get to the end of the delta the river is shallower and can only accommodate 50,000 DWT vessels.
Buying ships is a highly-specialised private equity activity nowadays, with the likes of Chris Boyle's Pacific Transport Fund at CLSA Capital Partners specifically looking to invest in the vessels themselves, rather than the harbour real estate that the infrastructure funds target.
Past the delta and up to Wuhau, the river accommodates smaller 5000 DWT vessels, then 3000 DWT ships past Yichang up to the Three Gorges dams, which was built to prevent those flood cataclysms.
After the dam, there is a bottleneck, with a somewhat convoluted river-land river shimmy for cargo. At present that is the only way to get past the Three Gorges congestion.
China's 2006 to 2011 Five Year Plan hopes to uncork this bottleneck, dredge the delta to a 12.5 metre draft as well as expand port capacity.
"This river will start to account for more outbound cargo too," says Lau. "Today the Yangtze is China's greatest inbound infrastructure."
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