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(Bloomberg) – The dysfunctional Swedish credit market creates opportunities for investors wishing to take advantage of the merits of problematic and unreliable liquidity.
Niklas Edman, portfolio manager at Carnegie Fonder AB, says market characteristics such as lack of liquidity, lack of transparency and volatility of value “are just a threat or threat, they can also be an opportunity. “
Given the current state of the Swedish credit market, Edman, who is helping to oversee about $9 billion at Stockholm-based Carnegie Fonder, says “we will be compensated for those perceived or genuine dangers across higher margins. “
In March, Carnegie Fonder was one of 35 Swedish budgets from constant sources of income to temporarily halt investor buybacks as bond costs plummeted due to panic triggered by the coronavirus pandemic.
Despite this, Edman says Carnegie’s existing fund pricing mechanisms are “robust. “It even goes so far as to go up that “the volatile component of spring worked well. “
Read more: Scandal follows crisis after 35 bond budget freeze in Sweden
But the fund manager says the crisis has exposed gaps in the Swedish credit market, in terms of price, liquidity and transparency.
With only a limited number of companies actively trading securities, Edman says that “the evaluation becomes difficult, in the sense that you don’t have an official end value like the stock market. “
Asset managers like Carnegie Fonder can have up to 500 bonuses on all funds, so it’s vital that valuation is done through a third party,” Edman said. It emits Norway as a style imaginable that Sweden can copy. The Nordic Bond Pricing company offers an independent daily value for bonds, a popular one that Sweden has not yet introduced.
The lack of liquidity, or the ability to buy and sell bonds, is no worse in the Nordic region than in the rest of the world, according to Edman. “Markets are significantly larger in size, while balance sheets — have remained the same,” he said.
The Scandinavian credit market is “less mature” than its opposite numbers in the United States or continental Europe, which are characterized by characteristics such as a repo market or negotiable indices, Edman said.
But it also says that if an investor in the Swedish credit market is “selective,” it is imaginable that he “avoids credit events, while being rewarded with higher margins. “
Bloomberg L. P. , the parent company of Bloomberg News, offers a competitive bond pricing service called BVAL.
(Add over BVAL)
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