The news coincided with the US Thanksgiving holiday, which exacerbated the move. Uncertainty remains, of course, but the virus has been with us for some time and the economic impact outside of travel sectors will be less compared with the period when the virus initially made an impact in the spring of 2020. The Q3 reports tell the story from most companies that they still work through a higher demand level. That can obviously change going forward, but most guidance is positive.
The fund’s development was moderately negative for the month, while the Bloomberg global high yield index fell 2%. The primary issue market in Europe and the US was muted due to the turmoil late in the month. US high yield issuance was $28 billion.
The fund was very cautious during all of November and added only one new name from the primary market, OI European Group. Furthermore, the fund did not add exposure to the travel or leisure industries as the world opened up during September and October. We are pragmatic on the overall world economy and a slight cooling will also help reduce the large lead times we have seen in the logistics sector.
OI European Group is a high-tech glass and package solution specialist. Their vision is to be the most sustainable producer of glass packaging products. Circularity in our economy is one important driver to combat waste. The bond, issued in early November, trades above issue price despite the turmoil towards the end of November.
In the secondary market, we sold in Ball Corp, Swedbank, SEB, Belden and IQVIA. The fund increased its holding in Tresu.
The synthetic CDS credit index fell in November. The iTraxx Crossover index went from + 261bp at the end of October to +286bp at the end of November.
Portfolio management team:
Philip Lindgren
Portfolio manager
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