Portfolio Manager comment Coeli Nordic Corporate Bond Fund I-SEK June 2024

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Nordic Corporate Bond Fund (Class I) advanced 0.49% during June. Since year-end, the NAV per share has consequently increased by 3.31%.

After the recovery of risky assets in May, we saw a mixed performance in June. In Europe, risk appetite was largely characterized by political turbulence in France. European equities fell by 1.3 percent and credit spreads widened. Credit spreads on European high yield bonds increased by 37 basis points to 359 basis points. On the other side of the Atlantic, the S&P 500 had a strong month, rising 3.5 percent, while high yield spreads were more or less unchanged at 309 basis points. Market yields rose during the month, partly driven by an increased likelihood of a new term with Trump in the White House.

The Nordic credit market has so far been spared from the turbulence in Europe, which has resulted in stable and slightly rising bond prices, but with very limited trading volumes in the secondary markets.

For the second month in a row, the ship leasing company Ocean Yield was found among the month's biggest contributors as the company's bonds maintained their positive trend. Property companies developed generally strongly during the month supported by falling interest rates and tighter credit spreads, positive contributions were seen from Castellum and CIBUS, among others. Good development was also seen for bonds from Klarna after a sale of Klarna Checkout was announced. The sale frees up some capital and Klarna positions itself more clearly as a consumer-focused player that provides payment and financing solutions.

Telecom company Millicom, mainly active in Latin America, came out at the end of the month with an updated forecast for free cash flow that is expected to be significantly stronger than previous guidance. With good operational development, the company is now expected to reach its goal regarding indebtedness already at the end of the current year.

The Norwegian solar energy company Scatec announced that it has signed an agreement regarding the expansion of an existing solar and battery storage power plant in Cameroon. At the end of the month, progress was also presented regarding a larger project in Egypt where Scatec, together with partners, is developing a plant to produce renewable hydrogen.

During the month, new investments were made in Norske Skog and Assemblin Caverion Group. Norske Skog offers interesting exposure to the paper and cardboard market. The company is just finishing an investment program where capacity is shifted from paper, in structural decline, to cardboard, which is in structural growth. After a merger in the spring, Assemblin Caverion Group is today a leading Northern European technical service and installation company.

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