In May, the PCGA USD share class delivered outperformance of +0.74% over its benchmark Bloomberg Global Aggregate Corporate Index’s 0.21% return. The GBP share class delivered similar outperformance of +0.72% compared to the respective GBP-hedged index.
As mentioned in last month’s note, it is as markets reopen from bouts of volatility, such as that seen in April, that the Strategy typically sees its strongest performance. During these periods, we typically see the emergence of pricing dislocations leading to significant opportunities across primary and secondary markets.
May saw ongoing improvement in risk sentiment as markets continued to react to President Trump’s 9th April announcement of a 90-day pause on tariffs. The S&P 500 finished the month up 6.3%, NASDAQ 100 up 9.1% and the Eurostoxx 50 up 5.4%.
Benchmark credit spreads tightened materially, with the Bloomberg USD Corporate Aggregate Index ending the month tighter by 18bps at 88bps and its European counterpart 11bps tighter at 99bps. US government bond yields were higher, with the 10-year Treasury yield increasing by 24bps on the month.
Having derisked in March and early April, on the evening of 9th April Coolabah cut all its hedges/shorts and started aggressively buying assets. Throughout the month capital was vigorously deployed and this led to strong performance in the second half of April and continued through May. As of 31st May, fund positioning started to revert towards benchmark as profits were crystallised on many positions.
Primary markets reopened on 10th April supply continued apace in May. In fact, May 2025 was the joint (with Jan 2009) highest month on record of EUR denominated investment grade corporate supply with €110bn of issuance. USD primary markets were similarly buoyant with $151bn of IG corporate supply.
Allocations in primary deals also significantly increased in quality. Through its close relationships with issuers, Coolabah typically receives more favourable allocations in primary deals. Through April and May, based on the metrics we follow, Coolabah saw a significant further 40% improvement on its allocations relative to its peers.
