Monthly report July 2022 – NFF

NAV rate in July was 103.72, which gives an increase for the month of 0.43 (0.43 %). Slightly lower than previous months due to a high proportion of liquidity. The fund is closed for deposits in September so that we can invest the liquidity that came in during the summer. We expect that it will go well with the information we have today.

Inflow for the month of July is SEK 35 million, many thanks for that. On an annual basis, we are slightly above 6 %.

As you may have noticed, the fund has changed managers. The funds' former manager and CEO, Fredrik Sjöstrand, will work full-time with Riddargatan Förvaltning AB - the company that manages realized mortgaged property within the framework of Scandinavian Credit Fund I. In his new role, Fredrik will be responsible for the development and disposal of the holdings in this company , with the aim of adding the greatest possible value to the fund's shareholders. Fredrik will have a title as Senior Partner and, in addition to the aforementioned, support the organization owned by Kredifin AB. We thank Fredrik for his fantastic work in building up the fund and managing it. Thank you Fredrik.

Stefan Skrimsjö, with previous experience in the management organization during the period 2016 to 2019, is recruited as the new responsible manager of the fund and of the Nordic Factoring Fund. Stefan Skrimsjö has extensive experience as a senior executive and as an entrepreneur primarily within the financial market. Stefan has, among other things, a background as CEO of Verdispar Securities in Sweden as well as CEO and founder of Shepherd Energy – a securities company in electricity trading. Furthermore, he was director and founder of Evli Penningmarknad in Finland and before that bank director at Föreningsbanken Finland and Den norske Creditbank in Gothenburg.

​The market and the economy

Inflation in Sweden is now 8.5 % June 2022, it is likely to creep higher in the coming months.
Inflation, which has now reached levels around 9 – 10 % around the Western world, leads to central banks increasingly aggressively raising key interest rates. In 6 weeks, the FED has raised the policy rate by 1.50 %. Judging by the market's reaction, they seem to be discounting that the aggressive hike will bite. Long-term interest rates have fallen slightly, the stock market has taken some leaps of joy and the price of raw materials seems to be subdued.

Below you can see how the market's expectations of the central banks' interest rate increases have changed since last month. The market sees continued increases for one more year before lowering the interest rate as the economy declines along with inflation. It is extremely uncertain with these forecasts, prepare yourself for continued volatility in the market.

What happens with sharp interest rate increases is that growth in the economy is dampened. We are already beginning to see signs of declining demand.

The Economic Institute's latest forecast in July shows that the Swedish economy continues to decline. A year ago the Barometer indicator stood at 120 and is now down to 101.3. Primarily, it is the declining household demand that contributes to the fall. Against the backdrop of rising interest rates and inflation, pessimism will likely remain and characterize the markets going forward.

IFRS 9

The reserves in this fund are very small. Everything is in category 1 and the fund's collateral is over 30,000 invoices pledged in favor of the fund. These are rolled over in 30 to 90 days with credit insurance both with and without recourse. Furthermore, there is property insurance for an eventuality should false invoices appear.

We look brightly at the possibility of growth for factoring in 2022, our partner is getting more and more assignments and that is positive. A bit of a bummer is that competition is increasing and thus pricing is getting tougher, so I think we will land closer to 6% in 2022 than 7% which was the case in 2021.