Before making any final investment decisions, please read the prospectus, its Annual Report, and the KID of the relevant Sub-Fund here
Likviditetsstrategi declined with 0.13% during March. Since year-end, the NAV per share has consequently increased by 1.80%. Expectations that the global economy would have strong resilience despite the rapidly and sharply rising interest rates took a hit in March when weaknesses in the banking system emerged. Although the problems surrounding the banks in the US and Europe differ, like inflation, it is a sign of the challenges created when central banks for a long period of time stimulate with low interest rates and then quickly hit the brakes.
In addition to the risk that similar situations may evolve due to speculations about which is the next weak bank, it is likely to affect banks' ability to take on risk and their lending capacity. Consequently, there may be tougher credit conditions for companies and households, which may hamper economic growth. As such, the market is now doing the work for central banks, which will therefore soften and no longer feel the need to continue with aggressive rate hikes.
As far as Europe is concerned, the takeover of Credit Suisse created turbulence in the credit market when Swiss authorities decided that the bank's AT1 securities would be written down to zero. The fact that debt owners would take larger losses than shareholders created great uncertainty about the order of priority in other jurisdictions outside Switzerland. The European Central Bank and several banks therefore felt compelled to declare that the ordinary capital hierarchy still applies, and that Switzerland was therefore is to be considered as an exception. As a result, the decline in the At1s in Europe and the Nordic countries was short-lived and they are once again trading at the same levels as before the Swiss action.
The banking turbulence and uncertainty about economic growth resulted in rapidly falling market interest rates and rising credit spreads. The U.S. 2-year yield fell from over 5 percent to 4 percent in three days, the biggest drop since 1982. The market is now pricing in that the US Federal Reserve, after June, will have to cut interest rates by almost 100bp by the end of the year. Credit spreads in Europe widened from 350bp to over 450bp. In the Nordic region, there were broad price declines in several sectors, but especially in real estate bonds and in particular the more liquid hybrids issued in euros.
Overall, we believe that the Nordic market has so far been fairly balanced during the turbulence, which is probably due to satisfactory liquidity with relatively high cash positions in the fund system.
Among the month's major contributors was Hoist Finance, which during the month announced the acquisition of a relatively large portfolio of overdue consumer loans in Sweden, and adjusted financial targets were also communicated. Hoist Finance is in an interesting position, a very solid capital position and access to relatively cheap financing via deposits should enable investments and an increased growth rate. Covered bonds also contributed positively as a result of falling market interest rates.
The negative impact on the month's results came mainly from real estate companies, where larger declines were noted for, among others, Balder and Samhällsbyggnadsbolaget i Norden. The sector was pressured by concerns that the banks will be more restrictive with their lending as a result of the banking turmoil. Balder presented an offer to buy back all the company's outstanding bonds in Swedish kronor maturing in 2024 and 2025. SBB announced that during the quarter they had secured refinancing of just under SEK 12 billion, the amount exceeds by a wide margin the company's debt maturing in 2023.
During the month, the fund participated in a new issue from Telia Company and bonds from Scatec, which produces renewable electricity, were added to the portfolio. In addition, there was a new investment in a commercial paper from Tele2. The three companies are deemed to contribute to increased diversification and to be relatively un-cyclical.
Portfolio Manager of Coeli Likviditetsstrategi
Portfolio Manager of Coeli Likviditetsstrategi
Inception Date | 2010-05-01 |
Management Fee | 0 % |
Performance Fee | Yes |
Risk category | 2 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 KID 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.