Although the summer slowdown in the primary market came early this year, we did see a few issues in sterling and there was plenty happening in secondary markets in July.
Investment Grade credit spreads continue to be well supported and we took profits in our recent new GlaxoSmithKline 28’s. The Sainsbury 6H 20 hybrids were duly called and redeemed. We raised some cash to fund further purchases by selling some of our NAB 2025 Covered paper and also took the opportunity to exit our National Express 23’s, which had tightened back in considerably by 350bp to trade well over par. We added to our Fidelity 24’s and took the new issue National Grid 28’s at Gilts +110 basis points. We maintained our AAA weighting by adding to our Canada Pension Plan 29’s.
There continues to be very strong demand for hybrids, especially T2 Insurers and we added to the Legal and General 5.625% 2031’s, these remain well bid. We reinstated a position in an old friend, the Standard Chartered 5.125% 34’s which were LME’d a while back but still have over 500MM outstanding. We participated in the HICL tap, adding at a discount of over 5%.
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