Link Mobility beat expectations
This August we noted that long-term interest rates rose somewhat after the spring dip. The US Fed meeting in Jackson Holes was high on everyone’s news agenda but did not have a big impact on the market.
The Fed chairman gave a well-balanced speech in which he mentioned the possibility of reducing support purchases this side of year-end if the economy allows, while clearly separating any decision on this from potential interest rate increases. At the same time, a vigilant eye is being kept on the march of covid mutations and their impact on the economy.
The Nordic credit market awoke from its summer slumber in mid-August as companies from the entire risk scale seeking capital led to primary market intensity. The summer’s inflows and low secondary trading meant that deep investor pockets were awaiting the starter’s pistol, and Nordic credit margins therefore slipped a little.
August is the month when most of the portfolio’s holdings in the high-yield segment report, and although there was some concern about high commodity prices most companies delivered stable numbers from a credit perspective.
It is worth highlighting that high yield holding Link Mobility reported above expectations and upped its profitability targets for 2021. The company’s growth, profitability and stable cash flows, together with the bond’s pricing, meant that we chose to increase the position slightly during the month and it is now a well-placed top-10 holding in the portfolio.
European Energy, which is also in the top 10, chose to extend and expand an existing bond so we stretched our position slightly. With its operations in solar and wind energy, the company is very interesting both from a sustainability perspective and from the growth potential in this sector.
We saw one of the fund’s holdings, Axactor, gain official credit ratings from both S&P and Moody’s, which benefited the company’s bonds and, ultimately, also the portfolio.