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Capital Markets Update – Week of March 29, 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 provide a run down on the equity and fixed income markets, as well as highlight developments on our Percent platform . Let’s unpack!

A bullish week and warm weather, for those of us in New York City, came unironically in tandem with Spring. In the equity markets, Friday marked the best day in more than two weeks for the Dow Jones, S&P 500, and Nasdaq. A special highlight to the Dow, closing 450 points higher marking a session high and a winning week. The week started strong, and optimism only heightened as Jerome Powell, Chair of the Federal Reserve, praised fiscal policy and rapid vaccine roll out as two pivotal contributions to an improving economy. The Federal Reserve also stated banks could resume buybacks and raise dividends as of June 30, as long as they pass this year’s stress tests. The effects of this news were evident as bank stocks rose, with Wells Fargo and JPMorgan Chase up roughly 1%. On Thursday, the Labor Department shared unemployment claims fell to their lowest weekly level since the beginning of the pandemic, roughly a year ago. Initial claims for state benefits came to 657K, an improvement of 100K from the trailing week. Further, as states begin to loosen restrictions, and dining and entertainment open, layoffs are dwindling contributing to the revival of the economy and lower unemployment claims.

Leveraging the positive news of dropping unemployment claims, President Biden held his first official news conference in the white House East Room, shared hopeful sentiments for economic recovery but did not equate the progress made to the work still left ahead. In addition to economic forecasts, President Biden announced a new goal of 200 million vaccination shots in his first 100 days of presidency, an increase of the original 100 million targeted, which was reached 42 days ahead of schedule.

Switching gears to the fixed income market, post the announcement of the Federal Reserve, we saw treasuries take a dip. The yield on the benchmark 10-year Treasury note fell to 1.615% on Tuesday, a negative decline of more than six basis points. The yield on the 30-year Treasury dipped more than 5 basis points to 2.326%. On Friday, we saw slight increases with the 10 year closing at 1.67%, and the 30 year closing at 2.37%.

Looking at our Short-Term Note Program at Percent, the week ended with a slightly negative cash flow, due to the prepayment of one offering with Pollen. Nonetheless, across live deals, we continue to see an uptick in average investment size, as many of our live deals were upsized beyond their initial target offering size.  This week we closed one transaction, with originator partner, Pulse Medical Finance, a provider of health care receivables.

  • PMF1 2-2021-2, a 6 month note offering 13.00% APY closing at $3MM, reflecting an upsize of $1MM. The deal was fully subscribed in under 48 hours, across rollover investors and auction bidders, many of which were first time investors on the Percent platform. We are always glad to see participants in the Dutch Auction materialize their bids to investments.

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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