We applaud Nobina’s sustainability efforts
The Riksbank left interest rates unchanged again in October, very much as expected.
More surprising was that it continues to communicate a likely increase in December. After that, the interest rate path is downwardly revised and flat, so with a potential hike of 25 basis points in December we are likely to see the repo rate at 0% for a relatively long time to come.
The first month of the year’s final quarter offered some primary transactions. Carnegie Investment Grade participated in two issues: Trelleborg’s 5-year bond gives us Stibor +93 basis points; and DNB Bank issued a 3-year bond that pays Stibor +37 basis points.
A new name in the portfolio is Norwegian holding company Storebrand, which together with DNB Bank increases the fund’s Norwegian exposure slightly.
Another new name is Nobina, which is the Nordic region’s largest public transport company and does excellent work in sustainability. With its 3,600 urban and regional buses, it transports 1 million passengers every day. It opened its first routes using self-driving buses in 2018 in the Barkarbystaden urban development project. The bond we have invested in is green, has a remaining maturity of just over 4 years and pays Stibor +100 bps. The money from the bond will be used for electric buses, vehicles run entirely on biofuel, and charging infrastructure for buses. Its buses currently use 81% renewable fuels. It has long-term contracts with stable counterparties and is selective with contracts to maintain good profitability.
Real estate company Fabege received a rating upgrade from Moody’s, from Baa3 to Baa2, which led to somewhat tighter spreads. Another company in the portfolio that experienced an increase in value was Nordic Entertainment Group, where the news of a joint venture with Telenor caused spreads to narrow.
The quarter began with an active market and positive sentiment. It remains to be seen how the market develops as we move towards the end of the year. Carnegie Investment Grade rose 0.05% this month.