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Before making any final investment decisions, please read the prospectus, its Annual Report, and the KIID of the relevant Sub-Fund here
Nordic Corporate Bond Fund (Class I) retreated with 0.05% during August. Since year-end, the NAV per share has consequently decreased by 6.25%. August began in a constructive mode with a positive market development for both equities, government- and corporate bonds. During the last two weeks, however, the tone was more negative because the high inflation is expected to lead to extensive interest rate increases from the world's central banks. Sharp statements by representatives of both the Fed and the ECB that they need to do more - more rate hikes - before they can be confident that inflation is returning to a level in line with targets, further diluted the sentiment.
Government bond yields, which fell back somewhat during the summer, rose as a result across the board. The rise was strongest in the short maturities, which led to the yield curves flattening out even more, in both the US and Sweden, the short interest rates are now clearly higher than the longer ones - something that is often seen as a signal of an upcoming economic slowdown.
Credit spreads for high-yield bonds in Europe increased significantly during the month, which together with generally rising interest rates resulted in a negative total return. The Nordic corporate bond market withstood the turbulence relatively well with moderately widened credit spreads.
Activity in the primary market picked up towards the end of the month. In Sweden, issues were mainly seen from banks and investment grade companies, including a couple of real estate companies. The new issues were received with relatively good interest, which is positive after a couple of turbulent months with low activity. The financing cost for issuing companies is in most cases significantly higher than it was at the beginning of the year, which lays the foundation for a good level of return in the corporate bond market in the coming months and quarters.
Among the month's major positive contributors were the two ship leasing companies Ocean Yield and SFL. Both reported during August stable profit development for the second quarter, good market conditions mainly for container and tankers strengthen the companies through reduced counterparty risk.
Bonds from Infrastructure Logistics, active in construction and excavation, also contributed positively after a strong quarterly report that showed strong organic growth and improved margins. The company has an active acquisition agenda and several acquisitions have been completed during the year, the acquisitions have to a larger extent than expected been financed with equity, which results in falling leverage and lower credit risk.
Negative impact on the result came mainly from the insurance group Sirius International after the company unexpectedly announced that it does not intend to call a subordinated bond. In recent years Sirius has had weak profitability, despite this the company's financial strength is still strong with a good solvency ratio. However, a change in strategy has led to greatly improved insurance results in the last three quarters. The new strategy also aims to lower the risk in the company's investment portfolio, overall, improved and less volatile earnings are therefore expected in the coming quarters.
YA Holding, active in adult education and employment training, also contributed negatively after the company announced that it intends to start negotiations with investors on the terms of the company's bond. YA Holding reported a weak quarter with significantly lower operating profit because of low occupancy rates in employment training. The number of participants in the courses is expected to increase towards the end of the year, until then, however, the company must take measures to manage its liquidity.
During the month, the fund's holdings of covered bonds (AAA) were increased while the exposure to real estate companies was slightly reduced.
Portfolio Manager of Coeli Nordic Corporate Bond Fund
Senior Analyst
| Inception Date | 2014-06-18 |
| Management Fee | 0.5 % |
| Performance Fee | N/A |
| Risk category | 3 of 7 |
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Before making any final investment decisions, please refer to the prospectus of Coeli SICAV I, its Annual Report, and the KIID of the relevant Sub-Fund. Relevant information documents are available in English at coeli.com. A summary of investor rights will be available at https://coeli.com/regulatory-information-coeli-asset-management-ab/.
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.