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SSAB issued a sustainability bond aimed at cutting greenhouse gas emissions by 10 percent by 2025

Inflation risks are still present, and one thing worth mentioning on this theme is that the US Federal Reserve now expects interest rate increases in 2023 rather than in 2024. The initial reaction was negative, but at the time of writing the stock markets have recovered somewhat and the market is still hot for new and existing companies that want to raise new capital regardless of asset class.

The Nordic credit market is keeping investors busy ahead of the summer doldrums, and we saw a large number of new and old issuers from the entire risk scale approach the market. Investors’ pockets must be deep because, despite the large flow from primary markets, credit margins have shrunk slightly during the month for new transactions. As credit margins in some segments begin to approach historically low levels, we chose to decline a couple of new subordinated bonds as we think that the risk premium was simply too low.

An active primary market of course offers some interesting investment opportunities, and we chose to participate in transactions from Norwegian Link Mobility, SSAB and Finnish PHM Group, while at the margins we adjusted names such as Fastpartner and SCA in the secondary market. Link Mobility expanded its bond to enable an acquisition and establish a presence in the US market, while SSAB issued a sustainability bond med aimed at reducing greenhouse gas emissions by 10 percent by 2025. PHM Group is a company active in real estate services with a focus on the Nordic region, and the bond in EUR both matches the majority of the company’s income and contributes to liquidity in the high-yield part of the fund.

Given continued uncertainty associated with the pandemic, 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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