Capital Markets Update – Week of March 1, 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 Paola’s 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 Paola Rios, analyst on our Capital Markets team here at Percent. Thank you for tuning into this week’s update, where we will share a recap of the equity and fixed income markets, as well as highlight our weekly issuance. Let’s get started.

Month end can be quite the phenomenon. On wall street, the week started off strong, and on hump day, Jerome Powell, chair of the Federal Reserve, testified before the House Financial Services Committee and expressed an optimistic outlook for economic recovery amidst slack in the labor market. The NASDAQ erased early losses and the Dow Jones was higher for the 7th time in 8 days. Albeit a bullish outlook, the following day equities slid as bond yields surged, impacting tech companies the greatest. The tech-heavy Nasdaq composite had its worst day since October 28th, dropping 3.5%. The S&P lost 2.5% marking its worst day since January 27th. Come Friday, the Dow and S&P 500 closed at session lows, while the Nasdaq managed a modest rebound.

Amid short-term equity market weakness, the long term view may be positive. The House aims to pass its $1.9 trillion coronavirus relief package and send it to the Senate. Both parties of Congress aim to approve the bill before unemployment aid expires on March 14th. And with COVID-19 still a prevalent challenge, on Friday evening, an FDA advisory panel unanimously supported Johnson & Johnson’s single dose coronavirus vaccine for emergency use. This paves the way for the US to issue a third preventative treatment by as early as next week.

Shifting to the fixed income market, U.S high yield bonds posted another week of outflows. And as rates marched higher, investment grade bond buyers suffered the worst total returns since the start of the pandemic. The 10-year treasury closed at 1.38% and reached 1.61% on Thursday, the highest rate since February in 2020.  Investors responded with short maturities, with 30-year bonds accounting for just 2% of the week’s supply.

Looking at our Short-Term Note Program as well as our PercentPrime vertical, the week ended with a positive net cash flow as we continue to see our investors fund their accounts as more opportunities roll out. This week we are glad to share we closed two transactions. On our short term note program, we closed:

  • PLN1 2021-3, a 3 month note offering 8.50% APY. This deal closed at $1.25M, and was fully funded within 2 days, an attestation to the strong investor base Pollen has built since our inaugural note with them in August of 2019.

On our Prime platform, we closed our second Prime offering with our latest originator partner, Lendable, a provider of debt financing to rapidly growing fintechs in emerging and frontier markets.

  • WAT1 2021-2, a 27 month note offering 11.00% closed at $805K, reflecting an upsize of $180,000 from our initial target size.

That is all for this week.  Thanks for tuning in to this week’s update and we hope you have a great week! 

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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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