Signs of resilience and stability in the real estate sector
The high summer month of July was calm as expected, and we saw limited activity in the primary market. The market is dominated by buyers, which drives up prices and gives increasingly tight credit spreads. Company reports for the second quarter have begun to be released and, overall, we can so far see that the majority coped with the turbulence relatively well. Companies in the real estate sector are also presenting reports that indicate resilience and stability.
At the beginning of the month, the Riksbank announced that the limit for asset purchases will be increased from SEK 300 billion to SEK 500 billion up to and including June 2021. In September, the Riksbank will also begin buying corporate bonds. The repo rate was left unchanged at zero percent.
Very few changes were made to the fund during the month. The positions in mining company Epiroc and in real estate company Fastpartner were increased slightly. Fastpartner has a diversified portfolio with the majority of its exposure to offices. It has a good liquidity position and a stated ambition to upgrade its rating to Investment Grade, and has gradually reduced its borrowing. Carnegie Investment Grade is able to invest a maximum of 10 percent in the High Yield segment. We do this extremely selectively and we are happy to see companies make the journey from High Yield to Investment Grade, as Fastpartner intends to do.
July was a positive month for credits, and Carnegie Investment Grade rose 0.53 percent.
The coronavirus will continue to dominate, but the credit market has recovered well in recent months and, towards the end of August, the primary market should resume. With the Riksbank’s support, this speaks for a hopefully stable autumn for the credit market. Carnegie Investment Grade invests in well-managed, stable and sustainable companies. We prioritise a defensive and diversified portfolio, in line with our management philosophy.