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 R) advanced by 1.51% during January. Over the last twelve months, the NAV per share has consequently increased by 3.40%.
As mentioned in the last monthly letter, the year started with very high market expectations of rapid and many interest rate cuts in 2024. Central banks, on the other hand, are drumming along with their message that they will hold off on cuts until they see clearer and more persistent data points that justify lower policy rates. The US economy and labour market remain relatively strong, which suggests a soft landing and makes the Fed less stressed to rate its key rate cut. In Europe, inflation continues to fall. Still, the ECB is cautious and wants to first sign that wage growth in the area is not going in the wrong direction before talking about cuts. In Sweden, the Riksbank left its key interest rate unchanged at 4 per cent, but at the same time announced that there is now less risk of inflation becoming entrenched and that interest rate cuts will therefore come earlier than communicated.
Overall, there is increased optimism, with the economic downturn expected to be mild at the same time as the trend of falling inflation is persistent, which means that lower interest rates are now only a matter of time. It is an environment that is favourable to corporate bonds and credit spreads has also receded in recent months.
With a generally positive sentiment in the Nordic corporate bond market and expectations for future interest rate cuts, bonds from real estate companies were particularly favored. After low issuance activity at the end of last year, several real estate companies chose to come to the market in January, Balder Castellum and Corem were some of the companies that successfully issued new bonds. Castellum and Heimstaden were among the month's biggest contributors.
Bonds from the reinsurance company SiriusPoint also developed well after a conference call where investors were updated on the company's strategy and current position. The management confirmed the company's strong financial position, and that the strategy change provides the desired results with improved profitability and a lower risk profile.
Bonds from the credit management company Intrum fell during the month after the company's annual accounts mainly lived up to expectations but still received a poor reception. The company's indebtedness decreased somewhat during the fourth quarter, while operating profit and margins deteriorated. In addition, Intrum announced a major sale of a portfolio of non-performing loans – the sale significantly strengthens the company's liquidity profile, while at the same time the earning capacity deteriorates in the longer term. Thus, the management was once again forced to postpone the leverage target from the end of 2025 to sometime during 2026.
During the month, the interest duration was shortened through disposals of covered bonds from Swedbank Hypotek where the liquid was placed in a FRN from DNB Boligkreditt, both with AAA rating. Bonds with a long maturity from Securitas were exchanged for shorter ditto. During the month, the fund participated in issues of subordinated bonds from Klarna Bank and Länsförsäkringar Bank.
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/.
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.