MaritSolblad-40

Monthly report March 2021 - HYOF

Like February, March was characterized by strong activity in the Nordic primary market for high-yield bonds. Probably partly an effect of increased transaction volumes in Nordic M&A and partly a pent-up need for refinancing.

We made 2 investments in the secondary market in March, these took place in illiquid bonds issued by 2 major finance companies. As the bonds are illiquid, they are traded with a relatively large bid / ask spread, which gave us a mark-to-market effect over the end of the month and reduced the affected return for the month to +0.29. We are now back on positive NAV for the year 100.09 and the underlying portfolio today has a yield to maturity of approximately 8% per year.

More and more people are starting to see increased inflation in the US as a result of fiscal policy measures under Biden and better macroeconomic statistics. It also drives expectations of higher inflation in Europe and the Nordic countries. The price development of European high-yield bonds (iTraxx Europe Crossover) is relatively flat during the first quarter of 2021, and remains at lower levels than before the market's reactions to the March 2020 pandemic.

We still see many interesting opportunities in the bond market. We are opening up for monthly issues in HYOF during 2021. The next issue is on April 29 and it is possible to subscribe as usual through Avanza, among others.

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