Nordic Factoring Fund månadsrapport – juli 2023

Nordic Factoring Fund monthly report – July 2023

Nordic Factoring fund AB (publ) reports a NAV rate for July of 103.03. That's an increase of 0.52 %.
During the beginning of 2023, the fund has set up new credits for financing invoices of approximately SEK 370m and is positive about the portfolio's future returns. In July, the fund set up a new line of credit for financing invoices of SEK 50m. The portfolio's underlying return has increased and the fund also sees the possibility of better interest rates going forward, which could have further positive effects for the NAV going forward.

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 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 market and the economy
Interest rates continue to put pressure on the market and further interest rate increases are expected to occur. Both the ECB and Sweden see challenges with inflation even if it goes down. Swedish GDP decreased during the second quarter and shows signs that the unexpectedly strong economy may slow down.

The Euro exchange rate has been at a record high during June and July, and although it has fallen somewhat at the end of July, the exchange rate is still high compared to historical rates. The high exchange rate can affect various aspects of the European economy and trade.

Inflation data show that core inflation in the eurozone remained unchanged at 5.5 percent in July. At the same time, core inflation in Sweden has risen to 6.6 percent in July from 6.1 percent in June. These developments indicate ongoing 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 could 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 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.

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