May 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 May 2021.


STNP Market Commentary

  • Percent’s Short Term Note Program (“STNP”) market (including both Percent and Percent Prime issuances) continued to expand during the month of April. 
    • As of May 1st, a total of $48.9 million of notes were outstanding, marking  the highest amount ever outstanding on the Percent platform. 
    • Following $18.2 million of STNP issuance in April across 11 transactions, total issuance since inception stands at $293.5 million.
    • STNPs issued in April had an average APY of ~12.02%, with average tenors hovering around the 221 days mark.
    • Since inception, Percent has officially returned over $6.4 million in aggregate interest payments to our growing investor base.
    • We were able to meet or increase target transaction sizes across all 11 transactions issued this month. 
    • With no new defaults or losses year to date, we continued to maintain a relatively low default rate of 0.96% since inception. 

 

Securities Market Commentary

  • This month we are also pleased to announce the successful close of FAT Brands Inc.’s (NAS: FAT) $144 million whole business securitization — the largest structured product transaction in Percent’s history.
    • Percent served as the co-lead underwriter alongside Jefferies LLC, making it our third with the company known for its iconic franchise brands like Fatburger and Johnny Rockets. More information available here.

 

General Market Commentary

Vaccine initiatives across the globe have been ramping up over the course of April, with approximately 7.5% of the world population having at least one dose of the Covid-19 vaccine. Although vaccine efforts and efficacy shown in the US are encouraging, many developing countries are enduring the worst of this health crisis with the path to recovery still uncertain.

In other news, President Biden unveiled on April 28th his plan to spend another $1.9 trillion on The American Rescue Plan. Since the beginning of his term, Biden has proposed nearly $6 trillion across three major plans. While these federal funding initiatives are expected to spur economic growth with focuses on improving infrastructure, affordable housing, education, to name a few, the cost of this funding will likely be funded through increased taxes and more stringent tax enforcement. Some economists have also raised concerns these fiscal stimulus packages will have on inflation risk, given the influx of cash into the market. In this vein, inflation also accelerated in March, with the personal consumption expenditure price index up 2.3% year-over-year. Additionally, on April 29th, the US GDP report indicated a 6.4% increase in GDP in Q1 2021. Even after the announcement that Biden aims to increase the corporate tax rate, the US stock market set record levels towards the end of the month, with the S&P 500 hitting over 4,200 at market close on April 29th. This movement was caused mainly by the release of blowout earnings results from Apple and Facebook and other tech stocks’ earning reports late in the month. 

In the fixed income markets, the 10-Year note slid 11.7 basis points over the course of the month, and the 30-Year note increased 12.6 basis points over the same period, further steepening the curve.

 

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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