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SE 
Scandinavian Credit fund I AB (publ) reports a NAV rate for October of 104.23. That's down by -0.39 %. We are aiming for a return level of around +5 %, which is considered very good given the market situation during the year.
New subscriptions in October were just over SEK 20 million, many thanks for that.
We have not had any new lending during October, however, a lift has been carried out on already granted credit of approximately SEK 17 million.
During October, the fund implemented a reservation on Indiska Magasinet AB as a result of its bankruptcy. The investigation into the bankruptcy estate is ongoing and, as a result, the fund has decided to reserve 50 % of the holdings as a precaution, the NAV impact for the reservation will be approximately -1 %. The fund will continue with the work of collecting debt to the fund unit owners by negotiating with the bankruptcy estate and realizing the collateral that exists, collateral in the form of corporate mortgages and property bonds. The security situation changed drastically during the beginning/mid-October through an incredibly rapid decrease in values and assets. Process with a reconstruction of Indiska Magasinet AB was started, where the fund would receive full repayment. After the reduction in reconstruction, bankruptcy proceedings were initiated, which put further pressure on security values. The fund follows up the bankruptcy estate closely and will work hard to recover money for the fund unit owners. The exposure that the fund has left after the write-down is considered fully possible to recover from the bankruptcy estate as well as the personal guarantee for the fund's exposure.
Otherwise, we see no need for write-downs and our Norwegian holding has now been valued by PWC and it remains at an unchanged valuation. The company has taken big positive steps in 2022 and is delivering on its strategy.
We have continued ongoing analysis and dialogue with all our borrowers who may have been negatively affected by the macroeconomic development. We believe that the portfolio is well positioned for the effects of the macro situation and we will continue the work of being proactive in our analysis and dialogue.
Direct lending as an asset class has good opportunities for strong returns as a result of higher interest rates and reduced capital in the market. The fund has a large pipeline of borrowers, which means that invested capital can be loaned immediately at very attractive terms and give the fund a good return. Despite negative developments during the year on the stock market, the fund has developed positively during the same period with many financial challenges, which shows the strength and stability of the fund.
The market and the economy
During October, the stock market in several parts of the world recovered somewhat and had a positive development. We saw a drop in the US 10-year yield which could indicate that the Fed is pushing the economy into recession while the stock market sees the rate cut as positive for stocks and is likely a big reason for the stock market recovery in October. During October, the Swedish krona stopped weakening against most currencies, which may be a consequence of recovery in the stock market. During October, many companies reported their quarterly reports, with several showing good resilience against the market situation and reporting results above analysts' expectations.
High inflation, rising short-term interest rates and electricity prices continue to hit the economy hard and erode household purchasing power. A designed energy support seems to be imminent and will now be tested by the energy market inspection, which can ease the burden on households and companies. Inflation is expected to remain high and possibly rise further in the short term, which indicates that key interest rates will also continue to rise. The global economic situation continues to affect the Swedish export industry and is not expected to improve in the short term.
The economic institute's barometer indicator continues to fall and the worst is the retail confidence indicator, which is strongly affected by household purchasing power and increased costs. Reduced purchasing power and expected increased unemployment in 2023 can reduce inflation and then also dampen or reverse the trend for higher key interest rates.