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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 R) advanced 0.05% during October. Since year-end, the NAV per share has consequently increased by 1.54%. Despite increased geopolitical turmoil and a continued tough climate for risky assets, with falling stock markets and widening credit spreads, the US 10-year bond continued to rise and is at the time of writing just below 5%. The development of US long-term interest rates will thus continue to elude the market and affect global risk appetite. Concerns about large budget deficits and thus large borrowing needs have pushed up long-term market interest rates, despite falling inflation and a less hawkish US Federal Reserve.
Long-term market interest rates are still lower than short-term rates, which has historically been one of the better indicators of impending recession, but the U.S. economy remains strong with annual GDP growth of 4.9% for the last quarter. In other words, the protracted discussion about whether the U.S. economy will fall into a recession or whether there will be a more balanced decline in economic activity will most likely be a theme for next year as well.
From a Nordic perspective, there is a continued focus on the real estate sector in Sweden. The challenges in many real estate companies increase as the market prices in higher for longer. At the same time, wheat is beginning to separate from chaff, and the picture of what is happening in the sector is more divided. Companies that have strong owners who have ability to inject capital or companies that act more quickly by slimming down debt through property sales are now distinguishing themselves. Our exposure to the sector as a whole remains low relative to the market and the focus is on the larger real estate companies where there has already been a large price adjustment in bond prices.
Among the month's major contributors, one found the two credit management companies B2 Impact and Intrum. B2 was supported by an upgrade from Moody's while S&P changed its outlook to positive. Intrum presented a quarterly report where the operating profit met the market's expectations, but the margins were somewhat weak. Leverage was reported slightly lower, and won contracts in the service business should enable a further reduction in debt in the coming quarters. The industrial group Vestum also made a positive contribution after the company issued new bonds and completed a repurchase of bonds maturing in 2024. Covered bonds also performed well due to falling market rates in the three-to-five-year segment.
Bonds from real estate companies generally developed weakly, except for subordinated bonds from SBB, which continued their positive trend from last month. Heimstaden AB announced that an agreement has been signed for the sale of a property portfolio in Iceland, which will provide a much-needed liquidity boost. With the transaction, Heimstaden gets leeway and the opportunity to handle upcoming bond maturities in 2024. Bonds from Castellum and Balder also detracted despite reports that lived up to expectations.
During the month, bonds from the Finnish property service company PHM Group and the life insurance company Storebrand were added to the portfolio. Divestments were made of bonds from First Camp, Stillfront and Protector Forsikring.
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.