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Pre-pandemic levels in global credit markets

The reporting season has started with great strength. This has continued to drive asset prices, with both stock exchanges and global credit markets trading at pre-pandemic levels.

As reopening progresses and stimulus measures fire up, especially in the United States, multiple macroeconomic indicators point to significantly stronger economic growth than previously indicated. However, there are still large differences between regions and the spectres of inflation and rising interest rates remain in the background even if the long-term effects of the stimulus diverge.

The credit market has continued to develop strongly and margins are now back at the levels seen before Covid, with the exception of Nordic HY where the premium is attractive. Record activity in the primary market, a strong risk sentiment for M&As, and stable flows have enabled us to be selective in new investments. During the month, we participated in the refinancing of Azerion, which in connection with new acquisitions replaced its bond with a larger new one in order to continue its growth journey. In addition to attractive terms in the new bond, we received approximately 7.7 percent in price premium and interest compensation. Oriflame announced an early refinancing and Tryg Forsikring was reduced as the bond matures in May.

The fund rose 0.42 percent this month, taking the return so far this year to 2.02 percent.

The coronavirus is creating great uncertainty, and even though we have seen a strong recovery, credit margins remain largely at attractive levels, especially in higher-yielding loans in the Nordic region. We maintain our conservative approach with a balanced and diversified portfolio and a focus on liquidity. We continue to look to sustainable companies, which we are convinced will contribute to the long-term return.

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