Monthly Commentary – November 2024 EUR

by | Dec 18, 2024 | Analysis & Performance, EUR, News

Macro Backdrop

November was a positive month for the fund, as we saw interest rates falling in Europe and the UK. In the US, interest rates only fell slightly. It seems that a Trump win/‘Red Sweep’ had already been partially priced in prior to the elections. This was notably the case for credit spreads which stayed stable or even widened slightly during the month, following increased geopolitical risk linked to the war in Ukraine. French political instability also had a small impact on spreads.

Valuations and Fundamentals

We have continued seeing Q3 earnings being reported, and European banks continue to deliver very strong sets of earnings. Regarding credit markets, spreads remain at the tighter end of historical values. This is notably the case for Additional Tier 1 (AT1) Contingent Convertible bonds (CoCos) which are close to 300 basis points above government bond rates. While this could be justified by fundamentals, we know credit markets tend to be cyclical. As such, we believe some caution is warranted. Moreover, extension risk, which looks at the percentage of AT1 CoCos priced to perpetuity or call, is currently around 10%. When market conditions are poor, it tends to peak at 100% and when market conditions are very strong, like currently, this percentage tends to approach 0%, indicating that valuations are at their tightest. As such, from a riskreturn perspective, we believe there is currently more value in Tier 2 and senior bonds from financials.

Subordinated debt

There were a few new issues in November, but most of them were priced at aggressive levels. As such, we saw some of these new issues traded lower in the secondary market. One exception was Deutsche Bank which issued EUR 1.5 billion of a new AT1 CoCo at relatively attractive levels. The demand for that new issue was EUR 11 billion and as such it went up 1.5 points. This truly demonstrates the change in market perception during the last few years following the turnaround of Deutsche Bank.

  • The Valuation date: December 17, 2024
    serieAsOFDateFKFundNameISINMTDMTDYTDYTDSISI
    120,241,217GAM Sustainable Climate Bond fundIE000BSJBO140.140.00140.06386.38-0.0110-1.10
    220,241,217GAM Star Crdt Ops EUR InvIE00B50JD3540.460.00460.120612.060.669866.98
    320,241,217GAM Star Crdt Ops GBP InvIE00B510J1730.310.00310.100810.080.942494.24
    420,241,217GAM Star Crdt Ops USD InvIE00B57693100.330.00330.101210.120.856985.69
    520,241,217GAM Interest Trend IncIE00BYM4P9130.830.00830.104610.460.392239.22

  • Please read this important legal information before proceeding.

    Information contained herein are solely for the use of the person who has accessed this information and may not be reproduced or distributed, even partially, to any other person or entity.

    The material contained herein is confidential and intended solely for the use of the persons or entities with nationality of or respectively with their residence, domicile, registered office or effective administration in a State or Country in which distribution, publication, making available or use of the information is not contrary to applicable laws or any other regulation.

    The material contained herein is aimed at sophisticated, professional, eligible, institutional and/or qualified investors/intermediaries who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described.

    The information is solely product-related and does not take into account any personal circumstances and does not qualify as general or personal investment recommendation or advice. In particular, the information is given by way of information only and does not constitute a specific legal offer for the purchase or sale of financial instruments. Moreover, nothing contained herein is constitutive of any tax advice.

    Every effort has been made to ensure the accuracy of the financial information herein but the information contained herein has not been independently reviewed or verified. Therefore, Atlanticomnium SA gives no assurance, express or implied, as to whether such information is accurate, true or complete and no responsibility is accepted by Atlanticomnium SA for any errors or omissions. Third-party content is the property of its respective provider or its licensor and is protected by applicable copyright law.

    Past performance is not indicative of future performance. The price of shares/units and the income from the funds/trusts can go down as well as up and may be affected by changes in rates of exchange or financial markets fluctuation, out of the scope of Atlanticomnium SA.

    To the fullest extent permitted by law, in no event shall Atlanticomnium SA or our affiliates, or any of our directors, employees, contractors, service providers or agents have any liability whatsoever to any person for any direct or indirect loss, liability, cost, claim, expense or damage of any kind, whether in contract or in tort, including negligence, or otherwise, arising out of or related to the use of the information provided.

    • AgreeCancel
    PERFORMANCE