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Scandinavian Credit Fund I AB (publ) reports a NAV price for March of 100.64. This is an increase of 0.19 %
The fund has not had any new lending during March, however, two increases have been made on already granted credits corresponding to approximately SEK 11.5 million. The fund will pay out at least SEK 150 million, corresponding to SEK 100 million of redemptions from November and SEK 18 million of redemptions from December. The fund will find out exactly how much will be paid out for this period in mid-April.
The fund remains closed for deposits and withdrawals due to large redemptions during November and December as previously communicated. The fund's hope and expectation is still that redemptions will be handled during April, but the fund also sees difficulties with refinancing and sales in the market, which complicates the process of collecting amortizations. The fund will continuously update regarding redemptions if new information arises during the month.
NAV-influencing factors for March are the value of the fund's listed shareholdings, which has decreased while the fund continues to see risks in the market increasing. Provisions and borrowers are evaluated monthly to act and adjust the value in the fund if risks increase or changes in the market affect sectors or borrowers. When redemption is handled, the fund continues to see very good opportunities in the market for the direct loan asset class. The fund receives many inquiries for good returns, which will positively affect NAV if capital for lending is available.
The market and the economy
After the major banking crisis in early March, which led to great turbulence and a sharp decline in both the stock market and interest rates, market confidence has returned. The rapid and strong intervention of authorities and central banks to secure market confidence and ensure that the crisis is stopped from spreading and that depositors' money is protected in affected banks has led most people to believe that the banking crisis is over, which may be a bit early to say for sure. But the focus will now shift back to inflation. The US saw a decrease in inflation and is now the lowest since September 2021, however, core inflation seems to be more difficult to bring down. The inflation figures for Europe will guide the ECB's interest rate setting and preliminary figures indicate a decrease in inflation, what will also have a major effect here is the underlying core inflation. Sweden publishes inflation figures in mid-April and core inflation will also be a major factor there.
The latest producer prices that have come out of the Eurozone show a decline of 0.5% for February which was slightly more than expected. The underlying inflation has low volatility and prices very rarely fall once they have been raised unless the economy enters a major review. This means that we still have an underlying inflation that in many cases rises on an annual basis despite the reduced activity in the economy. Inflation will probably need to be fought harder which will lead to further interest rate increases in the future, the expectation picture for April is 0.5 % by the Riksbank.
The market is volatile and uncertain, and the pressure on companies and households is increasing as a result of inflation and interest rate increases. The currency will need to be strengthened through interest rate increases in order not to import inflation, which could affect refinancing and bond markets. The risks in the market should lead to increased problems for companies and an increase in bankruptcies.
IFRS 9
The fund continues to see increased risks in the market, which is reflected in the provisions, but has not identified any major changes during March.