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 0.15% during May. Since year-end, the NAV per share has consequently increased by 2.81%. The month of May was characterized by calm markets with low volatility but continued high risk appetite. The US 10-year yield, which is so important for risk appetite, fell back slightly during the month after inflation figures came in in line with expectations instead of higher as earlier this year. As we have written about earlier, economic development in the United States has been surprisingly resilient compared to Europe. Now some indicators show a slightly weaker macro in the US but a brightening in Europe. For example, the purchasing managers' index for the manufacturing industry has risen, and in Sweden, SEB's Corporate Indicator showed increased optimism among companies.
Credit spreads on corporate bonds fell slightly during the month. European credit indices show a credit premium of around 290bp for high yield bonds and about 50bp for investment grade bonds. This is just below its historical averages. The Nordic region continues to look more attractive with credit premiums of about 450 - 500bp on high yield and 50 -100bp on investment grade. The relatively short duration in the Nordic region with many bonds linked to variable interest rates also results in higher coupons, which of course hurts the companies but benefits bondholders. The high-yield and investment-grade issuance market is wide open and is still largely characterised by refinancing.
Among the month's biggest contributors was the ship leasing company Ocean Yield, which presented a stable quarterly report that lived up to expectations. The company's credit profile benefits from a solid backlog that on average extends over ten years, a couple of strong years in most shipping segments have also contributed to reducing both residual value and counterparty risk. Bonds from the credit management company Hoist Finance developed well after the company issued new bonds on, for the company, favorable terms. At the end of the month, Hoist announced that the collaboration with industry peer Lowell is being deepened through the acquisition of a portfolio of overdue loans.
With generally rising markets and a good risk appetite, good development was seen for bonds from real estate companies where, among other things, the fund's holdings of Balder and Heimstaden developed well. The sector benefited from falling interest rates and the fact that several companies have shown that they have access to the capital markets through issues at reasonable pricing.
Some negative impact on the month's results was seen from Magnolia Bostad, which at the end of April released an interim report that showed yet another quarter without sales of new projects. In response to the challenging market conditions, Magnolia has implemented cost savings and is focusing the organization towards metropolitan areas, during the quarter the owner Areim showed its support for the company by making another capital injection. In addition, declines were seen for bonds from the finance company Bayport, which after a period of falling profits announced that negotiations on changes to terms with bondholders will be initiated.
During the month, bonds from 4Finance were divested and a new investment was made in a green hybrid bond from Danish Topsoe, a leading supplier of catalysts and technology to chemical companies and refineries, among others. Topsoe's has a clear green profile as its products contribute to reducing energy consumption in chemical processes and the company's solutions in, e.g. so-called e-fuels make the company a key player in the transition to a fossil-free society.
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 |
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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/.
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