An ever-greener IG portfolio
As expected, the Riksbank left interest rates unchanged at the beginning of the month and communicated that increases are likely to occur at a slower pace than previously forecast, given low interest rates abroad and weaker sentiment.
The ECB reintroduced asset purchases of EUR 20 billion per month, but kept interest rates unchanged. The Fed cut rates by 25 basis points. Geopolitical concerns arose as a result of the attack on Saudi oil production, and long US interest rates fell on increased uncertainty.
There was a high level of market activity in September, and we saw a number of primary transactions during the month. The fund participated in three new issues, including NCC and SKB. NCC is focusing more heavily on green projects, and we invested in a green three-year bond that gives us Stibor +75 basis points. SKB, Stockholms Kooperativa Bostadsförening, also issued a green bond of four years that pays Stibor + 39 basis points.
SKB has an AA- rating from S&P, has around 8,000 rental properties in Stockholm city, and has low debt. It has clear sustainability goals and will gradually increase its green funding. Stockholm Exergi also issued a green four-year bond that pays Stibor +45 basis points. The company has a BBB+ rating.
We increased our exposure and credit duration with energy company Kraftringen and Nibe by investing in four-year bonds in each name. Kraftringen has a rating of BBB+ while Nibe has no official rating. Carnegie Investment Grade rose 0.02 percent in September.
So far this year, the market has been characterised by strong demand from investors and increasingly tight credit margins. As we enter the final quarter of the year it is possible that we will see a less active market and more hesitant sentiment.
Carnegie Investment Grade is a fund focused on Nordic corporate bonds with high credit ratings. We are in a low interest rate environment, which of course poses a challenge, but strong and stable companies that have a sustainability focus are an attractive combination, and we see sound prospects to achieve a good return over time.