Nordic Corporate Bond Fund (Class I) advanced during January with 1.19 percent. After a strong ending last year, global risk appetite decreased slightly in January, which resulted in minor declines on the leading stock exchanges, with Stockholm as one of the exceptions. In the corporate bond markets, credit spreads generally developed sideways in both the US and Europe, while developments in the Nordics were more favourable with somewhat tighter spreads.
ECB and the Federal Reserve decided to keep their respective policy rates unchanged. Both central banks emphasized that they see near term challenges for the economy and intend to maintain the expansionary monetary policy. The ECB announced that asset purchases could be reduced if the underlying economy so allows, but also readiness to launch more measures if the economic development should deteriorate.
The reporting season has so far offered positive reports from a handful of the issuers represented in the fund. The insurers Tryg and Gjensidige reported their highest underwriting results ever for 2020 and both displayed very solid solvency positions. Telia's report was something of a mixed bag where declining revenues were offset by a strong cash flow. Telia launched a new strategy aimed at streamlining operations and enabling growth while further strengthening cash flows.
The largest contributor of the month was Golar LNG Partners, whose bonds rose sharply after New Fortress Energy presented a recommended bid for the company. Golar's bonds have been under pressure as the company has faced a major refinancing that has dragged on. If the offer goes through the buyer intends to repay the bonds immediately.
The credit management company Hoist Finance also made a positive contribution, but without any company-specific news. At the end of the month, the sector colleague Intrum, which is also in the portfolio, presented annual accounts that were slightly better than expected. Intrum reported collections on overdue receivables that exceeded previous forecasts and stated that the return on acquired portfolios currently is significantly higher than a year ago.
Furthermore, shipping-related bonds, such as Ocean Yield and Stolt Nielsen, developed relatively well after lagging the recovery during the second half of last year. The chemical tanker company Stolt Nielsen presented its annual accounts, which showed a healthy decline in leverage. This is despite continued challenging market conditions, which indicates good cost control and discipline regarding capital spending. The outlook for Stolt-Nielsen in the coming year is favourable as the global economy is set to gradually recover. In addition, the company announced that it plans to list Stolt Sea Farm, which conducts land-based fish farming. This is expected to make hidden values visible and strengthen liquidity.
Also, the absolute majority of the fund's interest-bearing holdings made a positive contribution. Minor declines were however noted for Eurobonds from the real estate companies Heimstaden Bostad och Balder.
During the month, bonds from Heimstaden AB were added to the portfolio when the company increased the volume of its bond loan maturing in 2025. The chemical tanker company Odfjell was also added to the portfolio, this in the form of a sustainability-linked bond where the issuer undertakes to reduce its carbon dioxide emission intensity by 50 percent by 2030.
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 |
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.