We are excited to introduce a new risk mitigation tool for investors. Thanks to our partnership with Anzen, we are now able to offer credit default swap protection on private credit investment offerings. This is the first time credit default swap protection has been offered on a private credit investment platform.
Beginning this month, select Percent offerings will now include mitigation for potential downside risk driven by default or non-performance of underlying assets. The first deal to offer such protection is the latest Percent Blended Note, now live and available for investment.
Blended Notes provide investors with a single investment basket that offers exposure to multiple products. While these investments give investors a simpler, easier way to diversify their portfolios and broaden access to the private credit markets, there has never been a way before today to provide default protection for an investment that includes assets from multiple borrowers.
How Default Protection Works on Percent
Our innovative solution with Anzen combines traditional and decentralized finance (DeFi), using Credit Default Swaps (CDS) to hedge against default risk. A portion of interest paid or principal amortization on the underlying securities of each Blended Note will be pooled to create a reserve fund, while the remainder will be generated through DeFi yield farming. This fund will provide protection for a specific tranche or slice of note exposure, with CDS premium, triggers, and other relevant details provided in the transaction documents of each Blended Note.
In keeping with Percent’s commitment to transparency, investors can see the amount held in the treasury in real-time, along with what the coverage ratio would be in the event of a default at any given point in time during the maturity of the note. These details can be viewed on any block explorer (like Etherscan), as well as on each individual deal page.
In short, this provides a first-of-its-kind added level of protection in the case of a default or related event, potentially safeguarding investors from losses even in the case of such an event.
Percent is committed to furthering risk management innovations in the private credit space, and our partnership with Anzen is our latest advancement in bringing best practices found in public markets to private investments.
To learn more about Anzen and default protection, or to start investing in the first default-protected deal on Percent, click below to see the first default-protected Blended Note on Percent.