Monthly Commentary - Pareto ESG Global Corporate Bond
Humans are basically positive and forward-looking creatures, despite periodic setbacks. Now that restaurants are opening and major events are finally letting in audiences, we have reason to rejoice. Lufthansa increased bookings 25-fold since April. There is a great need to travel and socialise.
When we sum up the month of June and the first half of the year, we do it with a smile. Of course, there are many factors that have driven the market upwards. The rate of vaccinations has increased around the world, which has contributed to society being opened up to some extent. Overall, we see that the companies' earnings and development have been better than expected. The market for corporate transactions and new issues has been enormously strong throughout the first half of the year. It is also worth mentioning that companies around the world are actively working to steer their operations towards more sustainable development. Bonds and bank loans have a larger share of links to various sustainability goals.
Credit spreads have decreased during the first half of the year in both the US and Europe. Strong company fundamentals, positive macro statistics and a strong risk appetite have been very positive factors for the market. Looking ahead to the near future, we see no signs that the appetite for risk will decrease. Potential concerns are probably a new wave of contagion and geopolitical conflicts.
The fund had another good month in June. During the first half of the year, the fund has increased its assets under management from positive client flows. The fund has been very active in both the primary issue market and in secondary trading. In March, the fund was classified as an Article 9 fund (dark green), which is the highest sustainability classification according to new European regulations.
With increased capital, the fund participated in a number of new issues, such as the Virgin Media green bond, the Nemak sustainability linked bond, the Picard sustainability linked bond, the Nobian sustainability linked bond and Energizer.
Nobian is a European leading chemical company. The company focuses on specialty chemicals. The bond links the company's development towards less CO2 emissions and also that the energy they use should increasingly come from renewable energy. Energy from renewable sources will reach 60 per cent by 2025.
Synthetic CDS credit indices improved during month of June. The iTraxx Crossover index went from +248 bp at the end of May to +230 bp at the end of June.
Portfolio management team:
Stefan Ericson
Lead portfolio manager / Branch manager Stockholm
Philip Lindgren
Credit analyst
Ingrid Johanne Nygaard
ESG analyst
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