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Likviditetsstrategi advanced during June with 0.14 percent. Since year-end, the NAV per share has consequently increased by 1.51 percent.
The largest contributor of the month was the consumer credit company 4Finance, which during the month began a process to extend a bond maturing in February 2022. The refinancing proposal has been met with broad support from major bondholders and is expected to close later in the summer. As part of the refinancing, 4Finance also announced that just over a third of the company's USD bond, which was previously repurchased, is now being canceled. With an improved maturity profile and reduced outstanding debt, credit risk is expected to decrease significantly.
The reinsurance company SiriusPoint was also found high on the list among the major contributors this month, but without any significant company news being presented.
During the month, new investments were made in the real estate company Catena, which is active in the warehousing and logistics segment, the business model is centered around the development of modern properties in attractive locations. The company is appreciated for its relatively strong cash flows and recently updated financial targets that aim, among other things, to show lower indebtedness in the future. In addition, the exposure to Klarna Bank and Intrum was increased.
Bonds from Fastpartner and Dometic were sold, both when the valuation appeared to be challenging after the respective credit spreads tightened significantly over recent months.
As expected, the US Federal Reserve (Fed) announced an unchanged Fed funds rate in the range of 0.0-2.5 percent, as well as unchanged asset purchase volumes in the market. However, consensus among Fed members shows that the first rise in the policy rate is expected to occur in 2023 from earlier in 2024. US inflation figures for the month showed that inflation continues to rise more than expected, as inflation rose by 5 percent in May. The Fed has also announced that the central bank intends to phase out one of the QE programs, which has holdings worth USD 14 billion, mainly in corporate bonds and ETFs.
The ECB also left both the target interest rate and asset purchases unchanged from previous month. As previously announced, asset purchases will continue at a higher rate than was the case during the first quarter. The ECB has also announced that aid during the corona crisis to European banks will be extended for three quarters for continued smooth lending to the public. Thus, the support will continue a quarter into 2022. During the month, the EU carried out an issue of EUR 20 billion with a 10-year maturity. The credit spread was set at -2 basis points. The money will be used within the recovery package "Next Generation EU".
In Sweden, the National Debt Office (Riksgälden) issued a government bond with a maturity of 50 years, which is the longest maturity for a government bond issued in Sweden. A total of SEK 10 billion was issued with a spread of +45 basis points. It is noteworthy that the issue was oversubscribed five times.
During the month, the Swedish Prime Minister Stefan Löfven chose to resign after a parliamentary vote on no confidence. This after the Left (Vänsterpartiet) lost confidence in the Government following proposals for ending rent regulations of newly constructed residential apartments. The Speaker of the parliament will now initiate the process to lift the deadlock and find a new proposal for government. The Speaker has indicated the process will be swifter this time around compared to after the 2018 election, when it took four months to find a government tolerated by the parliament. The financial markets have not reacted significantly to this new political crisis.
The European and Nordic credit markets showed somewhat tighter credit spreads during the month in both the high-yield segment and the investment-grade segment. Stibor 3-months was noted at -0.06 percent, which is a lower level compared to end of May.
Portfolio Manager of Coeli Likviditetsstrategi
Senior Analyst
| Inception Date | 2010-05-01 |
| Management Fee | 0 % |
| Performance Fee | Yes |
| Risk category | 2 of 7 |
DISCLAIMER. The information provided here does not constitute professional financial advice. Past performance is not a guarantee of future returns. The price of the investment may go up or down and an investor may not get back the amount originally invested. The key investor information document (KIID) and prospectus are available at www.coeli.se.