Portfolio Manager comment Coeli Likviditetsstrategi October 2022

Likviditetsstrategi retreated with 0.17% during September. Since year-end, the NAV per share has consequently decreased by 3.15%.

This material is marketing communication

Before making any final investment decisionsplease read the prospectusits Annual Report, and the KIID of the relevant Sub-Fund here

 

Likviditetsstrategi retreated with 0.17% during September. Since year-end, the NAV per share has consequently decreased by 3.15%. Supported by earnings reports that lived up to, or exceeded expectations, a recovery was seen on the leading stock exchanges during October. Expectations that central banks are beginning to approach the peak in terms of interest rate hikes also contributed to strengthening investors' risk appetite. Corporate bonds in Europe and the US also developed positively with tightened credit spreads, however, the same development was not seen in the Nordics, where the development was weak also this month.

ECB decided to raise its key interest rate to 1.5% and signaled that further rate hikes are to be expected. The tones from the European Central Bank were, however, softer than at previous interest rate meetings and the risks of a sharp economic slowdown were emphasized. Expectations for the US Federal Reserve ahead of their interest rate decision in November are that they too will raise interest rates by 0.75%.

Inflation data for September showed surprisingly high price increases in both the US, the Eurozone and Sweden. A large part of the price increases is still explained by rising energy prices. In recent weeks, energy prices have fallen back in Europe because of mild weather and full gas stocks. Unfortunately, gas prices are expected to rise again as we enter the colder parts of the year.

Developments in the Nordic corporate bond market were weak, where especially bonds from real estate companies continued to decline. The biggest negative impact on the month's results came from Balder and Samhällsbyggnadsbolaget i Norden, despite generally positive reports from both companies. Balder reported good growth in both revenue and operating profit, although with a slightly rising loan-to-value ratio. Balder's available liquidity increased during the quarter and exceeds maturing loans for the rest of 2022 and 2023. The same pattern was also seen for SBB: good growth and improved liquidity while write-downs in property values pushed up the loan-to-value ratio. The big news from SBB, however, was that they intend to distribute and list parts of the company's residential properties separately. The measure means that SBB becomes more focused on community properties and opens to increasing the proportion of bank loans, which can further strengthen the company's liquidity during a period when the bond market does not offer reasonable financing terms.

The biggest positive contribution came from the credit management company Intrum, which presented a report that was in line with expectations. The company continues to collect slightly above its forecasts and guides for a positive end to the year. However, the rate of investment is expected to decrease slightly, which should help to reduce the debt, which is still above the company's target.

Covered bonds also made a positive contribution to the month’s result due to stable short-term rates and falling spreads in this low-risk segment. Bonds from Dometic also contributed positively. The company's quarterly report was better than expected with stable margins. Dometic expects a gradual recovery in the service business, which makes up nearly 60% of sales, in the coming quarters, while the outlook for the company's important new sales of recreational vehicles is expected to remain weak.

During the month, the fund participated in a new issue from Vattenfall, which issued bonds with a short maturity. In addition, a maturity extension was carried out in Intrum where the fund's exposure was shifted to a bond maturing in 2025. During the month, bonds from Lakers Group, Norske Skog and SFL Corp were sold. All have withstood the turbulence of recent months relatively well and therefore now appear to carry relatively high valuations.

 

Gustav Fransson

Portfolio Manager of Coeli Likviditetsstrategi

 

Alexander Wahlman

Senior Analyst

 

Fund Overview
Inception Date2010-05-01
Management Fee0 %
Performance FeeYes
Risk category2 of 7

 

DISCLAIMER. This is a marketing communication.

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/.

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