BEIJING - Infrastructure real estate investment trusts (Infra REITs) can generate new capital to help fund the sector's expansion and provide companies with additional liquidity and deleveraging opportunities, according to a recent report from Moody's Investors Service.

Although we expect China's Infra REIT market to remain small over the next two to three years, it could expand sizably for infrastructure assets over the next decade.

Ralph Ng, vice president and senior analyst at Moody's Investors Service

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"Although we expect China's Infra REIT market to remain small over the next two to three years, it could expand sizably for infrastructure assets over the next decade," noted Ralph Ng, vice president and a senior analyst at Moody's.

Infra REITs allow companies to monetize their infrastructure assets and apply sale proceeds to future finance projects or debt reduction. The assets' operating records and ability to generate positive cash flows will also reduce risks for investors, the report noted.

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The agency also noted development challenges in the sector, including a less efficient tax structure, regulatory issues and uncertainty about the supply of eligible assets.