SCFI månadsrapport – juni 2023

SCFI Monthly Report – June 2023

Scandinavian Credit Fund I AB (publ) reports a NAV rate for May of 92.53. That's down 8.54 %.

The fund has not had any new lending during June, however, a lift has been carried out on already granted credits corresponding to approximately SEK 0.8 million.

NAV-affecting factors for June are that the value of two of the fund's shareholdings has fallen sharply. Both companies have been negatively affected by increased interest rates and changed market conditions. During the month, the fund has had an intensified dialogue with the companies' management and noted both reduced income and increased operating costs.

The market and the economy
Global key interest rates continue to rise as inflation is difficult to stop and there will be several interest rate increases in the coming months. The record weak Swedish krona curbs inflation and does not leave much room for the Riksbank to continue with interest rate increases.
Property companies' problems with profitability as a result of higher financing and operating costs cannot be fully mitigated by rent increases. Vacancy rates are also increasing, mainly for office and retail properties.

The liquidity of the bond market has basically ceased except for top-rated large companies. This deterioration mainly affects the property companies. The real estate companies have sold properties from their holdings and carried out new issues to deal with the deteriorating market conditions.

The interest rate increases have a delay effect and will gradually affect the real economy. The fund sees increased risks in several counterparties, above all counterparties that have retail sales and real estate exposures. The market for refinancing and corporate acquisitions continues to tighten, making it difficult to both divest and refinance objects.

The risks in the markets continue to increase and the fund has increased the reserves during the month. The fund especially sees pressure on interest-sensitive companies. The fund assesses that the market trend continues to be negative, which increases the risk and thus also the reserves.

The Fund's board decided in May 2023 to close and liquidate the Fund's management after a long period of net outflows and with approx. 730 mSEK in net outflow during the month of May. The Fund's management and handling of the portfolio assets continues as before, but with the goal of orderly liquidation and payment of all portfolio assets pro-rata to the Fund's shareholders. The first payment is expected to be paid with a preliminary date of 17 July 2023 and amounts to an amount of SEK 250m. The payment date depends on the Fund's issuing institution and Euroclear and its ability to administer the profit shares in connection with the payment. The payment is paid pro rata to the Fund's shareholders.

More information about the payment is communicated on the Fund's website:

As a result of the closure, the fund has established a separate page for FAQ (frequently asked questions). Questions and answers are updated continuously and as new questions are received by the Fund and within 2-3 banking days.

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