Expect more market activity
Last month ended with weaker and more cautious sentiment, and this was repeated in October. The spread of Covid has escalated and there have been lockdowns around the world. Together with the US presidential election, this is affecting global sentiment, and although Nordic sentiment has not really been impacted to same extent, we saw credit margins widen this month.
We saw some activity in the primary market at the beginning of the month, but market turmoil and the reporting period caused issues to ebb away towards the end.
The fund participated in Lifco’s issue of a slightly more than 2-year bond that pays Stibor +100 basis points. The company’s report for the third quarter showed a recovery in the dental care segment, and it is consistently maintaining high cash liquidity and a comfortable level of debt.
Otherwise, no major changes were made to the portfolio. The exposures in ICA and Tele 2 were reduced somewhat as they are issuers that have had a good development and where credit margins have tightened significantly. Indutrade, Telenor and Tryg Forsikring were among the issuers where we increased our exposure.
One of the fund’s largest holdings, community real estate company Vacse, received a rating upgrade from BBB + to A- during the month, which meant a positive price movement in the bonds. This company focuses on real estate in the judiciary and thus has a large proportion of public-sector tenants. The leases are long, with an average of over 10 years, and this contributes to long-term stable income. Also, the company has big ambitions in sustainability.
Carnegie Investment Grade fell 0.10 percent in October.
With more clarity over the US presidential election and Covid, we will probably see more activity in the market in the future. Carnegie Investment Grade invests in well-managed, stable and sustainable companies. We prioritise a defensive and diversified portfolio, in line with our management philosophy.