September: Stable rise for Scandinavian Credit Fund I

The NAV rate for September was 102.84, an increase on the month of 0.40 and a standard deviation of 0.92.

We have inflows in September of SEK 22 million, many thanks for that.

New lending in September was around SEK 95m, it is primarily a larger loan that is behind that figure.

The somewhat weaker NAV figure for September comes from IFRS provisions, 30-day month and market-valued holdings.

Our pipeline as of the end of September/October for new loans is approx. SEK 870m until Q1 2021. There is starting to be a great demand for new loans from companies. We gratefully accept all investments in the fund and it would be great if we could make some of these.

At the beginning of September, the fund filed a lawsuit against JOOL Markets AS Filial Sverige in the Stockholm district court for their actions in connection with the issuance of the Trinitas bond. What is being tried is the organizer's liability that JOOL has for the content of their investor material which was falsified and incorrect. It has never been tried in Sweden before, but a well-known Norwegian investment bank lost two cases of that nature despite several pages of disclaimers. We mentioned our intention to take legal action when we released the press release about this incident and we are doing so now.

It is of utmost importance to you as shareholders that we always do everything to recover invested capital. This is an extreme event where a criminal proceeding by the principal is the cause of the loss. In this case there are good reasons to believe that we will succeed, otherwise we would not do it. The fund has already written down the value of its holding in the bond, this means that the NAV in effect when we win will be positive. You can read about this in the daily law at the following link: https://www.dagensjuridik.se/nyheter/jool-markets-kravs-pa-61-miljoner-kronor-efter-obligationsskandal/

The market:

The single most important event in the near future is the election in the United States, I believe. I wrote in last month's newsletter that I think Trump will win and I still think so (although I hope for Biden), although I personally find it an unpleasant thought. As previously mentioned, I am most worried that Trump will not hand over power in the event of a Biden victory. It will probably lead to unrest, which in turn will put a damper on risk appetite.

In this graph you see the market's prediction of the election outcome, you can see that there is quite a large overweight for Biden. You can also see that 6 months ago it was the next zero. A lot can happen before election day.

(source Bloomberg)

Once the election is over, I think risky assets will continue to develop well regardless of whether Trump or Biden wins, but more so with Trump as he will probably come with an expansive tax package that will be received positively by the market.

As before this year, Covid-19 is what works in the other direction. A sharp increase is underway in Europe, however, it seems that politicians are trying to keep the wheels turning as long as possible. It would be a disaster with shutdowns of the type that happened last spring.

Vaccine, it is the holy grail that we all long for, it would change the picture completely. I think the market expects an effective vaccine to be in place before the turn of the year or during Q1 2021. It is unfortunately the reverse if it is much delayed.

Risky assets have had a bit of a tough time in September with high volatility. However, October has started in a big way and the Stockholm Stock Exchange has set a new "all time high".

I take the opportunity to show the fund's return from the start, despite the turbulent spring, we show a robust return for the year.

(source Bloomberg)

Below you can see the NAV distribution and main sectors in which the fund is invested: