Scandinavian Credit Fund I AB (publ) reports a NAV rate for June of 103.04. This is an increase of 0.35 (0.3408%) - a month that is a little weaker than expected.
The inflow for the month of June is about SEK 50 million, thank you very much for that. New lending in June is approximately SEK 58 million.
We have had a review of the portfolio with our external auditor PWC and this has led to minor adjustments to the values of some holdings. This is the reason for a slightly lower NAV this month. We will have a new review of a major holding in September / October. The development in the company has been very positive during the spring and summer. However, we want this confirmed through a closer dialogue during the autumn with the auditors before we change the valuation of the company.
We are still pacing plus 6 % in this messy world, which is very good.
One of our portfolio companies, Vimab AB, has been acquired by Headsent AB, which is listed on First North. The transaction will be finalized when it is approved by Headsent's shareholders at an Extraordinary General Meeting to be held on 22 July. We can not take up any possible price gain until it is ready and the deal completed. There is a press release from Headsent available in the market for those interested.
Our lending objects are still doing well given the information we currently possess, we of course follow all companies as closely as under covid. It is a new worldview and it is important to be one step ahead if possible. Given the situation the market is in, "cash" becomes more difficult to raise. We now receive inquiries from large fine companies that could otherwise raise capital in the bond market. It is thus a seller's market for those who have liquidity. It is possible to charge well for new lending now.
The market
I've inserted some of Teknikföretagen's analysis of the May inflation figure. They describe well the effect that rising energy prices have on other parts of the economy. All sectors are affected more or less directly or indirectly. One conclusion we can draw is that: everyone who suffers from these cost increases will strive to compensate for this as long as it is profitable for them to do so. We need to see a calmer demand pressure in the economy, which means that it does not pay to compensate for increased input prices. This is, among other things, what the central banks are trying to achieve through interest rate increases. Hope they succeed even though they woke up late. The image below shows how the different commodity groups contributed to inflation in the past year. Thus, as can be seen, the energy component is large and amounts to about two percentage points. Transport and food have also increased a lot. Both of these components are affected by higher energy costs, especially transportation. Food prices (and non-alcoholic beverages) were nearly nine per cent higher in May than the corresponding month last year, compared with 6.6 percent in April. Its contribution to inflation thus increased from 1.0 to 1.3 percentage points. In part, the rise in these prices are driven by rising prices for electricity and diesel. But also greatly increased costs of international shipping and packaging, a reduced supply of some foodstuffs as well as artificial fertilizers, weather phenomena and speculations in the wake of the Ukraine war has affected food prices. That Ukraine is a major exporter of for example, rapeseed, wheat and corn have also pushed up inflation.
(source: Teknikföretagen)
Below you see SCF I and its return since the start in comparison with a long bond fund. You can sell a long bond fund on the day, but you hardly get an interesting return if you compare with SCF I since its inception. It looks good to be able to present a curve that has given a steady and consistent return.
(source Bloomberg)
IFRS 9
IFRS June 9 (see table below)
LTV shows how large the exposure is in relation to the value of the security. That is, in category 2, the collateral value after adjustments is equal to the exposure the fund has to the borrowers. This is an effect of the collateral value of a holding being written down at the same time as the provision is reduced. In category 3, there is no change from the previous month.
ESG
In 2020, Finserve Nordic, which is the fund's AIF manager, joined the company to the PRI network, Principles for Responsible Investment. The network is independent but supported by the UN and encourages investors to make responsible investments by following the principles developed by the network.
Finserve Nordic believes that the integration of sustainability risks is an important part of the funds' investment processes. Sustainability risks are defined as environmental, social, or corporate governance-related circumstances that could have a significant negative impact on the value of investments.
Social aspects include e.g. human rights, labor rights and equal treatment. Environmental aspects are e.g. the companies' impact on the environment and climate. Corporate governance aspects are e.g. anti-corruption, shareholder rights and business ethics
All funds under Finserve's management follow the responsible investment process that is formalized in Finserve's Policy for Integrating Sustainability Risks. The policy is available on the company's website https: // finserve.se/vikten-information/. Each fund's sustainability policy is available on the funds' websites.
We can announce that based on today's sustainability requirements for funds, Scandinavian Credit Fund I is to be regarded as a “light green” fund, which is very good. In Sweden, about 30% of all funds have a rating corresponding to light green or better.
When you make your analysis of the fund, you should mainly look at the credit risk and liquidity risk in the fund. Are you comfortable with the credit risk generated by the fund's holdings? Furthermore, the assets are illiquid and it can take some time to get their investment back if many want to withdraw invested funds at the same time. The fund has a low market risk and has a low correlation with other asset classes.
We emphasize that we are not stressed by non-lending funds, but continue to work based on our models for credit assessment, all to ensure a good diversification of the portfolio in relation to the credit risk we take.
If you need to sell your holdings, do so in the primary market where you get the best price.
The official NAV exchange rate is published on the first banking day each month, what is shown during the month on NGM is not, I do not want to emphasize the official NAV exchange rate, as fund units in the secondary market may have been converted to a different exchange rate than official NAV.
