Going into 2022, there are concerns regarding inflation, as well as tapering and interest rates rising. We are very well positioned for a period of rising interest rates, as we have already demonstrated in the past, as well as in 2021. The fund performed strongly during 2021, despite the fact the German ten Year Bund moved up approximately 40 bps. This is partially due to our exposure to fixed-to-floaters and floaters and additionally, that the profitability of financials should increase with higher interest rates.
From a credit standpoint, capital and excess capital are at very high levels. The very strong credit metrics of the companies we own make us feel we have strong visibility regarding the income we will receive. At the same time, we are capturing spreads of close to 380 bps within subordinated debt of financials.
To summarize, our outlook is positive for 2022, as credit quality within our companies remains very strong. This ensures strong visibility of high income within the current low interest rate environment. At the same time, as we have seen during multiple periods including 2021, we have a very low sensitivity to interest rates. Valuations remain at very attractive levels and consequently, we should benefit from potential price appreciation. Finally, technical are very supportive. We expect limited net supply going forward, as most of the new issues should be for refinancing needs. Consequently, demand should be higher than supply, which should support the valuation of our securities.
