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General Market Review<\/span>\u00a0<\/strong><\/p>\n The month of September was relatively calm with low volatility and only few notable macro events. The most important one came from the US, where GDP figures for Q2 2025 were revised up in a third instance to 3.8% quarter-on-quarter (annualized), which was 0.5% pt higher than the previous estimate. The upward revision was mainly driven by stronger consumer spending. This positive momentum could continue into the third quarter, as the GDPNow Data \u2013 published by Atlanta FED \u2013 is indicating an increase of 3.9% quarter-onquarter (annualized) for Q3 2025. In this environment, risk assets have performed well as the S&P 500 rose by +3.6% and NASDAQ by +5.5%. Overall, equity markets recorded a stronger than usual performance for a September-month. However, there was a clear distinction between the growth and value sectors. The rally in technology stocks was fueled by optimism about further rate cuts by the FED.<\/p>\n The US Federal Reserve lowered its key interest rate by 25 Bp to 4% (lower bound) and 4.25% (upper bound), in line with market expectations. This was the first rate cut since December 2024. The FED signalled caution and reiterated that the future interest rate path would depend on the data. Moreover, FED-chair Powell emphasized repeatedly that risks of the labor market to the downside would outweigh risks to the upside of inflation. This was again a rather dovish statement, leaning toward interest rate cuts to stabilize the labor market. As of September 30, a 97% probability of an October cut and a 78% probability of a December cut was priced in the market. This corresponds to an effective policy rate that would be 43 Bp lower at the end of the year, namely 3.66% compared to the current 4.09%.<\/p>\n In the US, the labour market was weaker as non-farm payrolls increased only by +22k in August from +73k in July. The unemployment rate was slightly higher at 4.3% in August. In the Eurozone, the unemployment rate was at 6.3%. In the US, consumer price inflation for the month of August was higher versus the prior month. Headline inflation has increased by +2.9% (y-o-y) whereas core inflation (excluding energy and food) came in unchanged at +3.1% (y-o-y). In the Eurozone, consumer price inflation figures for the month of August were unchanged versus the prior month. Headline inflation has increased by +2.0% and core-inflation has increased by +2.3%.<\/p>\n US 10-year treasury yields decreased by 8 Bp from 4.23% to 4.15%, whereas German 10-year bund yields have decreased as well by 1 Bp from 2.72% to 2.71%. The MSCI World Index increased by +3.21% (USD den.) and the MSCI Europe Index rose by +1.59% (EUR den.).<\/p>\n Portfolio Management Report<\/strong><\/p>\n On the global bonds markets, September was a month with low volatility. We are still in a period of declining (implied) volatility, and this applies to interest rate volatility as well as credit spread volatility. Overall, High Yield credit performed well as spreads tightened by 4 Bp in the US and 3 Bp in Nordic High Yield (-7 Bp in Global High Yield). Synthetic spreads on the 5-year CDX.HY tightened by 20 Bp. In September the total return for the US High Yield market was +0.76% (Global High Yield: +0.71%) and for Nordic High Yield +0.7%. Thus, the performance was driven by spread as well as carry return of the bonds. The performance was again strongest in E&P (+1.3%) followed by Financials (+1.0%). Overall, the market was characterized by unusual stability, with secondary prices holding firm across the board. The share of bonds priced at distressed levels still remains low at around 3%. Meanwhile, 74% of bonds trade above par compared to 76% in prior month. Secondary trading volumes were relatively muted, as investors focused mainly on the primary market. Credit spreads remain close to historical lows in E&P, oil service and shipping. This partly reflects improved corporate balance sheets, but strong demand for bonds amid elevated returns has also played a key role in spread compression. On the US market, the riskiest tier of the junk bond market gained 0.98% in September, and yields closed below 10%. Nevertheless, the rally on the US junk bond market could come to a standstill after a flood of new issues and a broader risk aversion. The first US government shutdown in nearly seven years could threaten a temporary blackout of economic data. The current spread to treasuries of the broad US High Yield Index is at 281 Bp and below the one-year average of 300 Bp.<\/p>\n The activity on the Nordic High Yield primary market picked up sharply, with new issues reaching a record volume of NOK48bn. A total of 37 deals were consummated at an average deal size of NOK1.3bn, slightly above the NOK1.2bn average seen so far in 2025. The average new issue spread was 506 Bp and first-time issuers accounted for more than 50% of total volumes. Those issuers had to pay an average spread of 703 Bp compared with 394 Bp for repeat issuers indicating a new issue premium of around 309 Bp on average. A volume of around USD3.4bn was solely related to issues from US-Dollar or Euro. This was 72% of total volume for the month. Out of that, around one third was issued by energy (25%) and transport companies (9%). Within our core sectors a few relevant companies entered the market. The most interesting companies to us were International Seaways Inc. and DOF Group ASA. In terms of Relative Value, International Seaways looked quite compelling to us. International Seaways is a tanker operator and owner focussing on the transportation of crude oil and refined petroleum products. It is conservatively On the US primary market numerous deals were carried out in September. With USD57.6bn, this was the busiest September (since the GFC) topping 2013 and 2020 volumes and ranked as third busiest month (since the GFC) right behind March 2021 (USD59.1bn) and June 2020 (USD58.1bn). For five straight weeks more than USD9bn was priced each week. This supply boom was fueled by still-attractive total yields and a relatively resilient economy against the backdrop of easing interest-rates.<\/p>\n We started the month of September with a cash position of around 5% and an investment quota of 105%. Over the course of the month, we gradually increased our allocation to shipping companies by a total of 7%pt, partly via the primary market and partly via the secondary market. We therefore sold some low-yielding legacy bonds and increased the total coupon of the bond portfolio. At the end of the month our allocation to USD-denominated bonds is still at 76%. Moreover, we further increased our exposure to oil services (more precisely to the Subsea\/OSV segment) by participating in the DOF Group ASA primary deal. This subsegment is less cyclical than the drilling or seismic subsegment. Together with the shipping segment (21%), the oil service sector accounts for the largest share of the overall allocation at 20%. In a nutshell, the allocation changes between the different sectors were manageable. The effective duration of the fund was unchanged at 2.3%. We participated in two new issues that were priced on the Nordic High Yield primary market: International Seaways Inc. and DOF Group ASA. The bonds were attractively priced. DOF Group is a recurring issuer on the Nordic High Yield bond market and a leading offshore supply company with a fleet of around 77 vessels with operations around the globe. At the end of September, the fund’s ordinary income potential, which includes both bond coupons and coupons from synthetic instruments was higher versus prior month at 8.2%.<\/p>\n
managed and had a stable debt profile over the last years. Since it has a very low gross Loan to Value ratio (LTV) at 16%, we consider the credit quality to be quite solid. Moreover, the deal was still priced at a decent yield of 7.125%. The company entered the market on September 9 by issuing a 5-year senior unsecured note, which was fully covered by books and the issue amount was increased from USD200mn to USD250mn. There was no specific collateral attached. However, the company currently has unencumbered assets of USD1.2bn on its balance sheet, whereof the bond issuance is only 21% of that value. Bond proceeds are earmarked for prepaying the Ocean Yield SLB and for GCP.<\/p>\n