New popular item, same old story. Infrastructure funds are the latest new vehicle to sweep the world, and that’s creating the well-known problem of too much money chasing after the few good investments, a problem, which Standard & Poor’s says can threaten private equity funds. Infrastructure deals, S&P analyst Michael Wilkins told AltAssets, are "becoming increasingly highly leveraged, reflecting what we believe to be a pricing bubble caused by the wave of new funds chasing limited assets." As the hunt for those investments heats up, he says, credit quality is going out of control. Wilkins warns that despite the growing appetite for these funds, private equity funds and others in the sector should be diligent to carry out "full risk analyses of these assets...because not all will boast the strong, stable features assumed across the global infrastructure sector." Just how tight is the market? According to S&P, between $100 billion and $150 billion has been raised in the sector and is just itching to be invested; there’s been $145 billion of mergers and acquisition activity in the sector so far this year. Wilkins predicts 2007 will see more of the same: "Valuation and debt-to-EBIDTA multiples in infrastructure M&A deals have been soaring, while equity contributions have generally been decreasing. As a result credit quality is suffering across the sector as infrastructure assets adopt aggressive balance sheet in an attempt to fend off private equity players." As a result, he says, the infrastructure sector is "in danger of suffering from the dual curse of overvaluation and excessive leverage" -- shades of the dot-com bubble burst.