Monthly report March 2021 – HYOF

Like February, the month of March has been characterized by great activity in the Nordic primary market for high yield bonds. Probably partly an effect of increased transaction volumes in Nordic M&A and partly contained need for refinancing.

We made 2 investments in the secondary market during March, these were in illiquid bonds issued by 2 major financial 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 month-end and dragged the affected return for the month to +0.29. We are now back at a positive NAV for the year of 100.09 and the underlying portfolio today has a yield to maturity of approx. 8% per year.

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

We continue to 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 you can subscribe as usual through, among other things, Avanza.