November was a month of relative stability for European credit markets after the market recovery experienced in October. Concerns about the slowdown in the global economy started to abate while the continuing volatility in the EM/commodity complex maintained a cautious sentiment among many investors. Eurozone govies rallied further as yields decreased; the German 10-year yield fell 4 bps to 0.47% while the 5-year fell 10 bps to -0.18%. Cash credit indexes were broadly unchanged – a significant outperformance vs. the selloff in the US market; the iTraxx Main, Xover and Financial Subordinated CDS indexes tightened by 1 bp, 8 bps and 4 bps, respectively. The Abengoa story – the company announced it could not agree with its banks on a new credit facility and decided to enter pre-insolvency proceedings – was the highest profile event. Although it remains very idiosyncratic and will have limited knock-on effects on the European HY market, it should push risk premia higher on the most complex and challenging credit stories. We are more concerned at the moment by the growing valuation gap between European and US HY as the greatest source of downside risk for our constructive outlook for European credit. In this stable environment, we have continued to adjust the Fund’s portfolio and incept new positions.