June 2021 Capital Markets Update

Each month, Percent’s Capital Markets team releases an update that takes a look back at the previous month’s dealflow and highlights the upcoming deal pipeline. Below is Percent’s Short Term Note Program (STNP) monthly market update for June 2021.


Short Term Note Program Market Commentary

  • Percent’s Short Term Note Program (“STNP”) market (including both Percent and Percent Prime issuances) continued to expand during the month of May. 
    • As of June 1st, a total of $57.3 million of notes were outstanding, marking the highest amount ever outstanding in the Percent STNP market. 
    • Following $20.9 million of STNP issuance in May across 11 transactions, total issuance since inception stands at $314.4 million.
    • STNPs issued in May had an average APY of ~11.45%, with average tenors hovering around the 298 days mark.
    • Since inception, the Percent STNP market has officially returned over $6.9 million in aggregate interest payments to its growing investor base.

 

General Market Commentary

After a long Memorial Day weekend in the U.S., many began to transition into the summer season with renewed optimism as Covid-19 vaccines continue to roll out and daily new case rates steadily fall across the country. Despite the improvement of sentiment across the United States, other regions of the world are currently facing more urgent situations. 

On Friday, May 28th, President Joseph Biden released his first annual budget describing what would be a $6 trillion spending plan to bolster the U.S. economy. If the budget gets at least 51 votes in the Senate, the plan will push the U.S. to increase federal spending to its highest sustained level since World War II. The plan includes large sums for social programs and an $800 billion package to fund the fight against climate change. According to the BBC, the plan would increase the U.S. debt level to 117% of GDP by 2031, breaking through previous records set during World War II. The budget projects that the outstanding debt amount would increase by an additional $14.5 trillion over the next decade but would be paid off with the proposed tax hike on corporations, high income earners, and capital gains.

The public markets saw tumultuous movement over the past month as investors reacted to the CPI and inflation rate data released in the first third of May. The CPI increased 0.8% month over month between March and April of 2021, marking the biggest monthly increase since 2009. The inflation rate also soared to its highest level in 13 years, rising from 2.6% in March to 4.2% in April. Investors are now looking to the Federal Reserve meeting, scheduled on June 15th-16th, for further insight regarding potential inflationary risks.

Over the course of May, the Dow and the S&P 500 gained 1.95% and 0.55%, respectively. This marks the fourth consecutive positive month for the two indices. The small cap Russell 2000 experienced its eighth consecutive positive month with a gain of 0.11%. The Nasdaq, on the other hand, fell 1.53% during May as tech stocks faltered. In the bond market, treasury yields held flat over the course of the month with the 5-year and 10-year treasury bonds closing out at 0.812% and 1.618%, respectively.

Should you have any questions or would like to learn more about Percent, our issuances or the STNP market, please do not hesitate to reach out to us.

 


Nothing in this post 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. Any decision to invest must be based solely upon the information set forth in the offering documents, regardless of any information that may have been otherwise furnished, including in this update.

Charlie Lienau
Author
Charlie Lienau
Head of Business Development
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