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Tighter credit margins and eased concerns

Sentiment was more upbeat towards the end of November, and this continued in December, resulting in a strong credit market. After a sometimes turbulent and stormy year, 2020 ended on a positive note.

The second Covid wave is obviously a cause for worry, but the approval and distribution of vaccines around the world has helped to ease the concern.

November’s relatively high level of primary market activity ebbed away in the final month of the year. After having substantially widened during the March tumult, credit margins have returned to pre-crisis levels and in some cases are even tighter. ICA is one such issuer, and following good performance we sold our position with February 2023 maturity.

Otherwise, we increased our exposure in certain selected names such as Stora Enso, Hexagon and Husqvarna. We also upped our position in Nobina – the Nordic region’s largest operator of public transport buses. Investment company Latour has been a holding in the fund for a long time, and we bolstered our position somewhat. Shortly afterwards, Latour received an official A rating from Fitch, which resulted in the bond prices developing positively. A new name in the fund is Finnish bank Aktia, where we invested in a five-year bond. With the strong end to the month for the credit market, Carnegie Investment Grade rose in December by 0.17 percent.

A hopefully accelerating vaccination rate, a Brexit agreement in the bag, and continued stimulus all suggest that the positive sentiment will persist, which should assure a strong start to 2021. That said, the impact of Covid will continue to influence economic development. The fact that the Riksbank expanded and extended its QE programme will of course be a supporting factor for the credit market, especially for the Investment Grade segment.

Carnegie Investment Grade invests in well-managed, stable and sustainable companies. We prioritise a defensive and diversified portfolio, in line with our management philosophy.

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