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Capital Markets Update – Week of January 25, 2021 (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 January 22, 2021, where we provide news and insights that are relevant to our short term note program market.

Taking a quick look at markets, despite the shortened week, major stock averages closed the week up [1-2]%, with all eyes on Washington as the Biden administration seeks to crystalize its Covid-19 and economic recovery agenda.  The underlying economic data continues to tell a story of the have and the have nots, with December homestarts surging supported by low mortgage rates while at the same time retail sales fell 0.7% in December and weekly initial jobless claims continue to remain at elevated levels, coming in at 900,000 for the week ending January 16th. 

On the fixed income side,10y and 30y treasury yields closed generally flat on the week. Despite the shortened holiday week, issuance volumes across high yield were robust with $25.9Bn pricing on the week as investor appetite for yieldy paper persists bullish sentiment persists across risk markets. The 2021 issuance calendar was back in full swing in primary ABS, with $7Bn pricing this week across 8 deals, with prime and subprime auto dominating the landscape, complemented by commercial and aircraft ABS.  

Now diving into the STNP market, it was a busy week with almost $6MM pricing from two offerings, which brings our YTD total to just over $12.5…  up about 43% in issuance as compared to the same period in 2020. 

Looking at the technicals, 

  • It’s been a few solid weeks of net inflows onto the platform, with roughly $15 million coming in over the trailing 5 weeks… 
  • And in terms of demand we continue to note solid participation in our dutch auction process and overall breadth of final order books. 

Last week we closed two transactions:.

First up was TSM1 2021-1, a $2.96MM note with The Smarter Merchant, which was a 9-month rollover from 20-B. This transaction carried an APY of 15%, which was a 50bps negative new issue premium from its prior issuance This transaction represented a $710K upsize from the prior offering, making room for new investors to participate into this transaction.

On Friday we also closed SLT1 2021-1, a $3.0MM note with SALT, which was a 3-month rollover and upsize from 12-E. This transaction carried an APY of 9.25%, which was a 25bps negative new issue premium from its prior issuance. This transaction also represented a $1.2MM upsize from the prior offering, providing ample opportunity for auction bidders to participate in this offering. 

Today we are closing PLN1 2021-1, the $1.25MM note with Pollen, which was a 3-month rollover and downside from 3-AC. This transaction carried an APY of 8.50%, which was a 50bps negative new issue premium from its prior issuance. 

Today we are also closing PMF1 2021-1, the recent offering with Pulse, which was filled by its rollover investors. This transaction carried an APY of 13.00% which represents a 25bps negative new issue premium against its 17-D offering. 

This week we are also closing NWC1 2021-1, the latest issuance with Northwest Capital, which was also solely funded by rollovers and the target offering size of $4.4mm was met within24 hours from launch with a 12.25% APY. Additionally, ZIN1 2021-1, the latest issuance with Zinobe, coming with an APY of 12.25% is also set to close later this week, and is currently fully subscribed. 

On Thursday we also launched the auction for upcoming three new deals. 2 of these are new PercentPrime opportunities, and 2 are new Originators of our platform. 

One of the new Originators is My Edge Capital. Founded in 2018, Edge Capital is an Idaho-based platform connecting small and medium-sized businesses across the U.S. with capital, leveraging a data-driven and technology-enabled underwriting and funding model. Since inception, Edge has extended over $6 million in capital to hundreds of companies. 

The other new strategic partnership, this one on PercentPrime platform, is with Lendable. Lendable supports fintech lenders in pre-frontier, frontier, and emerging markets. Via our inaugural note with Lendable, investors will gain exposure to a senior secured credit facility to Watu Credit, a provider of motorcycle financing in Kenya, Uganda, and Nigeria, supporting sole proprietors in the ridesharing business.

Also in our PercentPrime platform pipeline, we have a new opportunity for Cherry. This is a longer term solution for Cherry and is a rollover from the deal they did earlier this year.

So all in all, we had another busy week with another one lined up as we have several launches going live today for new deals.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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