The summer ended on a high note
The market regained its momentum in August, and there is significant demand from investors as a result of inflows and growing cash positions. This was of course reflected in great interest in the primary transactions that took place during the month. In general, the trend of increasingly tight credit margins has continued, and the market is dominated by buyers.
In many cases, the corporate Q2 reports came in better than expected and most seem to have survived the pandemic relatively well. That said, it is not over and there is still some uncertainty about the future. Some effects may not become apparent until the next quarter.
The fund participated in a number of issues during the month. On the real estate side, Fabege issued a 4-year bond with a variable interest rate. Real estate is a sector that for obvious reasons experienced a turbulent spring. Companies with exposure to retail and restaurants are of course most affected. Fabege, with its central office exposure, has managed relatively well and has a strong balance sheet with financial flexibility. We are selective in the sector but see Fabege as a continued stable name. Svensk Fastighetsfinansiering issued a 2-year bond. Other companies in the primary market were Holmen and Lifco; Holmen with a 5-year bond at Stibor +70 basis points and Lifco with a 2-year at Stibor +100 basis points.
The summer ended with a positive month, and Carnegie Investment Grade rose 0.51%.
The markets have got off to a flying start after the summer and we can expect a high level of activity in the primary market during the autumn. It is clearly significant whether there will be a second wave of Covid, but hopefully the situation will not get worse. In other respects, there is much to suggest a 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.