SBB continues to surprise
November was characterised by continued good risk appetite, with stock markets once again driven to record highs, and the level of European credit margins is now almost in line with before the financial crisis.
However, global economic indicators have been mixed, with positive noises from US job data and slightly better than expected European purchasing data (although the trend is still negative), while China’s macro data surprised at the downside. The minutes from the latest Fed meeting show that they see no need to lower interest rates further. Despite poorer economic conditions, the now-ended reporting season can be summed up as relatively stable from a credit perspective.
The local credit market remained strong during November and showed a high intensity, with the majority of both existing and new issuers issuing bonds across the entire risk scale.
An intense month with many interesting company meetings resulted in investments including Tomra, which manufactures recycling machines for PET bottles, Swedish digital communication company Sinch, and Heimstaden Bostad, which issued a subordinated bond to partially finance the Dutch portfolio that was sold from the parent company Heimstaden AB.
One of our largest holdings, SBB, continues to surprise, this time with a bid for another holding in the portfolio, Hemfosa, which also focuses on community properties. Hemfosa has a different risk profile with slightly higher indebtedness, which means that its bond was traded up quite a lot on the news. SBB also received a positive rating outlook in connection with the bid, which in the long term should be positive for the bonds, although these have been traded down somewhat as a result of the bid.
During the month, the portfolio was mainly affected by a strong market and rose by 0.17 percent, taking the year’s gain so far to 3.79 percent.