On October 31, COP26 began in Glasgow. The meeting is the first 5-year review since the Paris Agreement, and it will be the most important global climate summit since Paris. During the weekend, the G7 and then the G20 countries managed to agree on ending all international financing of coal power. COP26 president, Alok Sharma, specifically mentioned this in his opening speech as a major step forward.
The fund management team works continuously to influence through dialogues and steer financing towards companies that contribute to improvement here, now and in the future. One of the more recent meetings was with Getlink, which is one of the larger holdings in the fund.
The Getlink group has recently tapped a €150 million of its green secured notes due October 2025 in which we are investing. The meeting aimed at ensuring that proceeds will be used to fund green projects, discussing the company Science Based Target plan to achieve the Paris agreement and identify company progress on EU Taxonomy framework implementation.
The global credit market fell in October. Issue volumes also declined after an enormously strong market throughout the year. We believe that credit spreads are now more in balance for the economy we see. The world economy will be affected by logistics problems and the pandemic for some time to come. What we hear from the companies clearly shows this situation, but the message is clear that demand is strong, and the companies are delivering strong figures and continued good prospects for future sales. Costs for raw materials and transport reduce margins, but most say that they will pass on these cost increases to customers in the future.
The fund's development was negative for the month for the first time since September 2020. The situation regarding Evergrande has, as we thought, become a more isolated event concerning China's real estate sector and no longer affects the market as a whole. The primary issue market in Europe and the US slowed down after record volumes during the first nine months of the year.
A new name has been added to the portfolio and that is Modulaire.
Modulaire is a global manufacturer of solutions for modular spaces. The company focuses a lot on the circular economy and being able to reuse its products up to 20 times. Modulaire has established a science-based target and defined a clear path to reach Net Zero by 2050.
In the secondary market, we increased in Profine and Cerba Healthcare. The fund sold Nissens and Encompass Health. We also decreased our holdings in names like Iron Mountain, Energizer, PTC and TDC.
The synthetic CDS credit index fell in October. The iTraxx Crossover index went from + 253bp at the end of September to +261bp at the end of October.
Portfolio management team:
Stefan Ericson
Lead portfolio manager / Branch manager Stockholm
Philip Lindgren
Credit analyst
Ingrid Johanne Nygaard
ESG analyst
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