Capital Markets Update – Week of August 21, 2020 (audio)

In an effort to provide even greater transparency around our offerings and our investment platform, the capital markets team provides weekly updates.

Listen below for Charlie’s most recent views on our short-term note program and the current private credit landscape from Percent’s perspective.

Please find the transcript for this video below.

 

Hi everyone, this is Charlie Lienau, Director for the Capital Markets team here at Percent. Thank you very much for tuning into this week’s market update for the week ending August 21, 2020 where we provide news and insights that are relevant to our short-term note program market.

Quick snapshot on the broader public markets. Earlier in the week, the S&P 500 broke above its February record high and notched a fresh all-time record. The Nasdaq also hit a record on Thursday. The largest share of these gains was driven mostly by strong gains in Big Tech stocks, with Apple up nearly 3% this week becoming the first publicly traded company in the U.S. to reach a market valuation of $2 trillion. In other news, the Fed released minutes from its July meeting confirming views that coronavirus pandemic “would weigh heavily on economic activity, employment, and inflation in the near term.” In this vein, the Labor Department reported on Thursday that initial weekly jobless claims came in above 1 million, surpassing market estimate of 923,000. Switching gears to the fixed income markets, benchmark treasuries yields decreased slightly, with the 10-year now hovering right around 0.64%, which is about 5 bps lower than last Friday’s close. The primary markets on both sides of the credit spectrum continue to see a record pace of issuance across a variety of sectors and ratings. When US high-yield bond issuance reached $47.4 billion so far in August this last Tuesday, it made it the second-busiest month on record; also, investment-grade sales are on track for their busiest August ever. Spreads for both IG index and HY have remained close to last week’s close with IG index at 131 and HY index hovering around at 502.

Last week was a busy week with offerings closing from Axle Payments, ZayZoon and ThunderRoad, and having crossed the $100mm mark in principal that has been repaid to our investors.

Now, diving into the STNP Market this week.

In terms of flows, we have had positive net flows every day of the week, resulting in a total of over $0.5 million of net inflows for the week.  Looking at deals for the week, this week we were live with four transactions:

  • 2-M, with Wall Street Funding, for $10.0 million. This transaction is the largest note ever issued on the STNP platform for Percent. It is a 1-year final term, amortizing offering, which is a rollover transaction from 2 notes, 2-D which had $4.0 million outstanding, and 2-G with $6.0 million outstanding. This note came with an APY 15.75% and we had participation of ~300 different investors.
  • We are also live with 5-K, which had an initial target of $3.9 million three-month offering with Northwest Capital, which is a roll-over of 5-J. The auction for Northwest Capital marked the largest number of participants in any auction ever on our platform. Considering the large rollover target, pricing remained at the prior 13%, which helped drive considerable demand as the deal is already about 90% funded. This deal will price and close next week on Thursday August 27th.
  • We were also live with a $1.4 million 3-month rollover with 3-W with Pollen. This note has an APY of 9.00% implying no new issue concession versus last note. As in previous offerings in this series, the transaction almost fully subscribed within 2 days from launch of the note. This transaction is set to close on the 23rd, but as it is a weekend banking operations will be set for Monday August 24th.
  • And finally, this week we were also live with our inaugural issuance for 17-A with Pulse Medical Finance, a California-based specialty financing company that buys insurance correlated receivables and cash flow from independent health service providers. Following a highly demanded auction for Pulse Medical Finance, we were able to launch this 6-month offering with a 13.50% APY. This transaction was fully subscribed within 2 days as well. This deal will formally price and close next week on Tuesday, August 25th.  

Looking ahead to this upcoming week we will have new offerings with Cherry, Aspiria and Arctos Capital open for investment as we will proceed to auction today and into early next week.

That’s all from us for this update. Thanks again for tuning in and look forward to catching up with you again soon.

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Nothing in this video should be construed as an offer to sell securities or a solicitation of an offer to buy securities. All investment involves risk and the possibility of loss, including loss of principal, and neither past performance nor forward looking information is a guarantee of future results.

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