In July, the PCGA USD share class outperformed its benchmark, the Bloomberg Global Aggregate Corporate Index, by 0.39% net of fees. The GBP share class delivered similar outperformance of 0.42% versus the GBP-hedged Bloomberg index.
Market attention in July was again focused on President Trump. While markets largely shrugged off the latest trade tariff threats, they were cautious about mounting political pressure on Federal Reserve Chair Powell.
Equity markets were buoyant: the S&P 500 and Nasdaq 100 both ending the month up just over 2%. The FTSE 100 performed strongly, surpassing the symbolic 9,000 mark for the first time and finishing the month up 4.3%. European bank stocks continued their strong 2025 performance, closing the month up 9.3%.
In credit markets European IG credit spreads were 12bps tighter, outperforming the corresponding US IG credit index, which finished the month 8bps tighter. Higher bond yields continue to support strong ongoing inflows into US and European investment-grade credit.
Since its 10 October 2023 inception, PCGA’s USD share class has outperformed the benchmark by 1.86% p.a. net (2.41% p.a. gross) with an absolute annualised return of 10.59% net of fees (11.14% gross) compared to the index return of 8.73%.
PCGA’s current (31st July) weighted average yield to expected maturity is 5.55% compared to the index’s 5.17%. PCGA’s weighted-average credit rating of A is one notch better than the index’s A- rating.
Even though primary issuance waned slightly as markets entered the holiday season, there were several notable deals brought to market. The ‘Reverse Yankee’ theme of US issuers taking advantage of lower yields by issuing in EUR rather than their home currency continued. In particular, Citigroup issued a novel 11-year subordinated deal, the first such deal in at least 15 years. Coolabah’s proprietary quantitative models typically give the firm a significant competitive advantage when pricing such deals for which there are few, if any, immediately comparable bonds.
In corporates, NTT, an A-rated Japanese telecommunications company, issued a jumbo $17bn deal across EUR and USD, marking the largest-ever offering by an Asian corporate in the global debt market. The proceeds were used to repay a bridge loan that was used for the buyout of a subsidiary. There was enormous demand for the deal, with almost 12 times more orders than bonds available. The fund selectively participated in the tranches that our models deemed to be the most attractive.
