A lack of specialist expertise, a restricted pipeline of government-approved projects and a narrow range of liquidity thresholds in available deals are the main challenges that hold non-bank institutional investors back from committing more funds to infrastructure debt transactions, according to National Australia Bank (NAB).

The bank said there was scope to create a much larger market than the current $15 billion a year, but it would require a higher participation rate from, among others, superannuation funds.

"Banks have traditionally been the main source. We've got the expertise and skill to assess infrastructure projects. Outside the bank it is harder to see how you get this kind of skill," NAB capital markets executive general manager Steve Lambert said.

The lack of expertise means these institutional investors are less confident in assessing transactions, especially those of greenfield projects.

"Non-banks don't like dealing with construction-phase projects. Most institutions give their money and want to start earning interest right away," Lambert said.

The lack of a solid pipeline for government approved infrastructure projects had also held back the sector, he argued.

But the recent federal budget has taken steps to address this issue and published a list of potential projects.

Lambert said it was now up to the government to deliver on those promises.

"Lists are good, but it is a conversion issue," he said.

The participation of super funds in the market was also low as a result of their high exposure to equities, he said.

Super funds have on average about 20 per cent of their total funds invested in defensive assets, which leaves little space for alternative debt strategies. But Lambert said it was partly about creating opportunities.

"It is about making sure that they can invest that cash domestically, rather than buying more foreign bonds," he said.

"It is about showing enough deals to institutions for them to build up the skills."