Nordic Factoring Fund månadsrapport – augusti 2023

Nordic Factoring Fund monthly report – August 2023

Nordic Factoring fund AB (publ) reports a NAV rate for August of 103.56. That's an increase of 0.51 %.

During H1 2023, the fund has set up new credits for financing invoices of approx. SEK 400m and is positive about the portfolio's future returns. In August, the fund did not place any new credits, but focused on structuring the portfolio to obtain optimal risk-adjusted returns with a focus on low risk. The portfolio's underlying return has increased and now has a rate that is above the target return.

Factoring financing enables businesses to manage liquidity needs, reduce risk and focus on growth. The potential flexibility and adaptability of factoring solutions make it an attractive financing option for various types of businesses, especially those looking to manage their finances in a more flexible and efficient way. The fund continues to see great demand and can finance all capital against good counterparties. The fund has carefully analyzed sectors and individual counterparties to mitigate risks and the portfolio outlook is very good. Despite increased risk in the market, the fund sees that the counterparties in the portfolio manage their payments very well and demonstrate strong repayment capacity.

The fund sees very good prospects in the market and has 0 % credit losses in 2023, which demonstrates how stable the fund generates high risk-adjusted returns. In addition to the good credit quality, there is credit insurance that covers the entire portfolio against losses. The good quality in the portfolio and factoring as an asset type have since 2019 proven to be a good investment. In addition to that, credit insurance provides double protection for investors and a good rating for the fund's assets and processes that insurance companies are willing to insure.

The market and the economy
Rising interest rates and sluggish core inflation continue to be the focus of the macro area. Forecasts about the expected interest rate peak have been pushed forward further and the interest rate is expected to be raised at least once more before the peak is reached. A period of high interest rates will mark the market for a long time, and Sweden will also have to consider a continuously falling krona, which may also affect interest rates in the future.

The Euro exchange rate has been at a record high during August and even from previously high levels in June/July, the exchange rate is high compared to historical rates. The high exchange rate can affect various aspects of the European economy and trade, above all, a weak currency can create imported inflation that takes longer to bring down. The dollar is also historically strong against the krone.

Indications for inflation in August show that core inflation in the eurozone is decreasing from 5.5 percent in July to 5.3 % in August. Sweden's core inflation in July was 6.4 percent and is expected to be either unchanged or only a minor decrease in August. Developments indicate continued challenges in managing inflationary pressures and their impact on the economy. The difficulty of bringing down core inflation remains. Unemployment appears to be increasing and forecasts suggest that it should increase in the fall of 2023, which may help to moderate inflation.

The reserves in this fund are very low. The fund's entire exposure is in category 1 and the security is over 30,000 invoices pledged in favor of the fund. The invoices are rolled in 30 more

90 days with credit insurance both with and without recourse. Furthermore, there is property insurance in the event that false invoices appear.

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