It’s the right time for Tomra
A grey November offered an active market with many primary transactions.
There is still demand from investors, and spreads do not appear to have widened to any great extent in these transactions. But credits with shorter maturities are experiencing more widening of spreads, largely explained by the approaching year-end, with seasonal factors such as reduced liquidity in the market.
Carnegie Investment Grade participated in several primary transactions during the month, including Tomra, which develops and manufactures recycling and sorting machines. It has a market share greater than 50% and is represented in more than 80 markets worldwide. It’s the right time for Tomra’s operations from a sustainability perspective, focusing on the circular economy. The company issued 3-year and 5-year bonds at Nibor (the Norwegian reference rate) +50 and +75 basis points, and the fund invested in both.
Sinch also entered the bond market for the first time. This company operates in digital communication and, among other things, provide services such as mass mailing in the form of text messages or video via its cloud platform. Its strength lies in the direct collaborations it has with mobile operators around the world, and it currently operates in 40 markets and is growing rapidly.
The bond runs for 5 years and was issued at Stibor +250 basis points. The fund has increased its exposure to Denmark through an investment in Spar Nord Bank. It issued a senior non preferred bond over 4 years at Stibor +105 basis points. The bond is denominated in SEK.
Carnegie Investment Grade rose 0.03% this month.
We will soon be turning our eyes to 2020, but before that it is very likely that we will see the Riksbank raise the repo rate to 0 in December.
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.