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Before making any final investment decisions, please read the prospectus, its Annual Report, and the KID of the relevant Sub-Fund here
Nordic Corporate Bond Fund (Class I) advanced with 0.39% during April. Since year-end, the NAV per share has consequently increased by 1.40%. The drama in the banking system that affected the financial markets in March abated during April. Possibly thanks to resolute action by authorities.
It is becoming clearer that growth in the economy is now losing momentum and that we are close to peak in interest rates in both the US and Europe. The big question is whether we are heading for a soft or hard landing, which is difficult to predict at the very beginning of a downturn. The labour market is holding up reasonably well and the companies' profit margins are generally stable. At the same time, we know that there are lag effects on unemployment and profit margins that will probably give way in the next few quarters. Risky assets such as equities and corporate bonds are currently pricing in a softer landing.
Movements in interest rate and credit markets were minimal during the past month. Long-term market interest rates rose slightly, while credit spreads remained more or less unchanged. The issue market in the Nordic region was calm and the secondary market was characterized by a generally solid risk appetite.
The development for bonds from real estate companies was mixed, Balder and Heimstaden Bostad were among the month's largest contributors, while Samhällsbyggnadsbolaget and Heimstaden AB fell in value. The quarterly reports from the major Swedish real estate companies largely followed the same pattern as the end of last year. Operationally, the sector is doing well with increased income thanks to continued low vacancies and relatively high rent adjustments from the turn of the year. However, falling property values and increasing interest costs are putting the companies under pressure and several companies are acting to reduce their debt burden through, for example, property sales and paused plans for project development.
Bonds from acquisition driven conglomerate Vestum also made a strong contribution after the company announced it was selling a portfolio of companies to a private equity fund. The proceeds from the sale are intended to be used to repay loans. The transaction is positive from a credit perspective as it strengthens the group's cash flows and raises its operating margins.
The major Swedish listed companies that so far have reported for the first quarter have generally exceeded expectations with strong development both for turnover and profit. Solid reports have come both from industrial companies and from the banking sector. One company that, on the other hand, fell short of expectations was the credit management company Intrum, whose results were somewhat disappointing because of unfavorable cost trends. Intrum's indebtedness was therefore reported slightly higher during the quarter, contrary to its long-stated goal of reducing leverage.
The fund's exposure to non-life insurance companies was slightly reduced when the holding of bonds from Norwegian Protector was divested. A one-year commercial paper from the paper and packaging company Billerud, was added to the portfolio with a yield of nearly 4.9%, appealing both thanks to the credit spread and the market's pricing of future interest rate changes.
Portfolio Manager of Coeli Nordic Corporate Bond Fund
Portfolio Manager of Coeli Nordic Corporate Bond Fund
| Inception Date | 2014-06-18 |
| Management Fee | 0.5 % |
| Performance Fee | N/A |
| Risk category | 3 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 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.