Capital Markets Update – Week of October 23, 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 Alex’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.

 

 

Hey everyone this is Alex Pirro, a VP on our Capital Markets team here at Percent and thank you for tuning into this week’s STNP market update for the week ending October 23, 2020 where we provide news and insights that are relevant to our short term note program market.

A quick look at the stock market this week, major averages went into Friday down inside of 1% from where they started, as the market struggles to find clear direction from stimulus rhetoric in Washington. On Thursday, weekly initial jobless claims came in better than expected, falling for the third time in four weeks. This, in addition to a slew of better than expected earnings reports, was seen as a milepost for the ongoing economic recovery.

On the fixed income side, despite the uptick in COVID cases across the country, 10y and 30y treasury yields hit a 4 month high on the backs of encouraging economic data and optimism from bipartisan stimulus talks. Sentiment in risk markets has been seen as generally constructive, as issuers look to price deals ahead of the election. The IG market priced over $15bn this week, further solidifying 2020’s record issuance volume at $1.6tr… and on the HY side we saw about $5bn price across the credit spectrum.

Continuing on the themes of the broader fixed income market, it was a busy week in ABS, with consumer ABS dominating the market across a series of auto, student loan and unsecured consumer loan deals. In terms of esoterics, an inaugural film-library backed deal for the film production and distribution house, Village Roadshow, began marketing. 

Now diving into the STNP market, it was a quieter week with $4.4MM pricing from one offering.

This brings our YTD total to just over $130m… which is about 3 times as much volume as we saw in all of 2019, which certainly speaks to the traction and level of activity we’ve seen on the platform this year.

Looking at the technicals, 

  • It was another solid week of net inflows onto the platform, with roughly half a million coming in over the first 4 days of the week… 
  • And in terms of demand we continue to note higher and higher participation through our dutch auction process. 
  • This was actually the highest aggregate participation rate yet in terms of auctions, with over 229 investors participating in setting the pricing range for the 5-L note from Northwest Capital.

On the issuance front we closed transactions this week for 12- E, a $1.8MM note from SALT, which was a 3-month rollover from 12-D. This transaction carried an APY of 9.00%, which was a 25bps negative new issue premium from 12-D. Today we also closed 3-AA, the $1.4MM note from Pollen VC. This was a 3-month rollover from 3-Y, and priced with an APY of 9.00%, implying no new issue premium from the last offering. 

17-C was also live this week, although the $2mm 6-month senior offering with Pulse Medical Finance, had been fully subscribed since last week. This transaction is slated to close this coming Monday. 5-L was also live this last week, which is the latest subordinate offering from Northwest Capital, an originator that offers receivable factoring services to small businesses in the Midwestern United States. This was a rollover offering from the prior 15-K, and was very well received by investors as it launched on Monday and was fully funded for $4.4 million within 24 hours. This deal carries an APY of 13%, same as 15-K implying 0bps new issue premium, and is expected to formally close early next week.

So all in all, a busy week with another one lined up as we have several auctions going live today for deals that are set to launch early next week with names like Cherry, Arctos as well as SellersFunding. We do anticipate a relatively high volume month with at least two additional originators added to the mix in November.

Additionally, on the surveillance side, we launched the latest reporting for Zinobe this week and are providing daily updates on our platform for our subscribed investors.

All new programs coming online will have daily or weekly monitoring and we have reports in the works for the remaining two active originators that currently do not have any as of yet as well… so we’re proud to be in a position where we should be able to deliver on the promise of unparalleled transparency in the entire STNP market by hopefully year end!

I think that’ll do it for us this week, thanks for tuning in and we hope you have a great weekend! 

 

 

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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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