Pemex, StoneCo, and Gran Tierra push Latin America exposure to 5% as Pender eyes high real yields
A sharp rally in platinum assets and Latin American debt helped drive the Pender Corporate Bond Fund to a 1.8 percent return in June, according to portfolio manager Geoff Castle.
Holdings tied to platinum metals delivered the biggest gains.
The fund benefited from positions in convertible bonds of Sibanye Stillwater Limited, a South African platinum group miner, and abrdn Physical Platinum Shares, which rose more than 25 percent.
Although trimmed, both positions remain in the portfolio due to the belief that platinum remains undervalued and that new metal supply would require significantly higher pricing.
Latin American debt and credit investments were another key contributor, with Pemex emerging as the fund’s largest corporate issuer exposure at approximately 3.3 percent.
The fund stated Pemex bonds still offer yields near 10 percent at longer tenors, supported by improving fundamentals and strong governmental backing.
Latin American exposure now accounts for about 5 percent of the portfolio, including positions in Brazilian payments firm StoneCo Ltd and Calgary-based Gran Tierra Energy Inc., which operates oil assets in Colombia.
Castle outlined two main reasons for the fund’s expanding LatAm allocation.
First, the region offers unusually high real interest rates, such as Brazil’s 15 percent short-term local interest rates against 5 percent inflation, and Colombia’s sovereign rates 5 percent above inflation.
Mexico also offers real yields of 4–5 percent.
Second, Castle noted the prolonged underperformance of Latin American equities in US dollar terms despite economic and earnings growth, calling the setup “extremely promising” for bonds and credit in the region.
The fund also saw a gain of over 35 percent from convertible bonds in Wolfspeed Inc., following the company’s announcement of a pre-packaged Chapter 11 plan to eliminate more than US$4.6bn in debt.
With the plan disclosed and awaiting court approval, Pender believes more positive developments may follow.
Among new positions, the fund initiated a stake in the hybrid bonds of BlueNord ASA.
BlueNord owns 37 percent of offshore oil and gas assets in the Danish North Sea in partnership with TotalEnergies and a Danish state entity.
The consortium is completing a major expansion at the Tyra field, expected to double production and extend field life through 2042.
Castle described the 12 percent yield on BlueNord as attractive given its estimated one-year default probability of under 0.6 percent.
Pender also returned to a previous holding in Lucid Group Inc. 2026 convertible bonds.
After exiting at $88.50, the fund re-entered at a yield above 10 percent.
Castle said Lucid has the stand-alone capacity to pay off the $960m maturity in under 18 months and noted support from majority owner, the Saudi Public Investment Fund.
The only notable detractor in June came from Spirit Aviation Holdings, where both bond and equity prices declined. Despite the drop, the fund increased its position in both first lien notes and newly reorganised equity.
As of June 30, the fund’s yield to maturity was 6.24 percent with a current yield of 5.27 percent. The average duration of maturity-based instruments was 3.75 years.
Distressed credit accounted for 4 percent of holdings, and cash made up 2.6 percent of the portfolio.
