This is the historical default rate of all investments on Percent as of May 2022. Out of the 29 past and present originators on the Percent platform, three have seen deals with defaults. At the same time, 98.18% of all Percent deals successfully returned investors’ principal and any accrued interest back to their accounts upon their completion.
- We see our current default rate as a reflection of our thorough due diligence and continuing originator surveillance.
- Understanding how each of these functions operate at Percent—as well as how they help mitigate investor risk and inform investor decisions—is crucial to understanding our default rate.
Due Diligence: Every originator on Percent goes through our due diligence process before they appear on the Percent platform. Due to strict requirements for numerous financial and organizational factors, we do not accept every originator for inclusion on Percent.
- Our due diligence process is our first line of defense against default risk. It is ever-evolving, and has only become more strict and more intensive.
- To get a better understanding of this intricate process and how it can help investors make better informed decisions, consult our detailed guide on how Percent’s due diligence works.
- Originators that do make it onto the Percent platform continue to go through recurring diligence during and after surveillance (see below).
Ongoing Surveillance: Once an originator is on Percent and launches a note, Percent conducts regular surveillance of the originator, their assets, and everything pertinent to a note program. We release our findings to current and prospective investors through our recurring Surveillance Reports, opening access to our surveillance data on originators and assets.
- We created the reports to work in tandem with our due diligence process, giving investors transparency into the happenings of originators and investments. This not only keeps investors abreast of any potential current or future risks (including default risks); it informs them of risks associated with the originator should they want to invest in their future notes.
- Percent’s surveillance is our way of monitoring for risks throughout an investment’s lifespan. To see how this process works for investors and originators, read our guide on surveillance at Percent.
How is Percent’s historical default rate calculated?
At Percent, we calculate our historical default rate as a ratio of:
a) Missed principal payments of notes that did not make full and timely repayment of principal as scheduled (subject to 5 business days of grace period), without giving effect to the realization of any subsequent recoveries; and
b) The total principal amount of all notes syndicated and closed on the Percent platform.
No Investment is Without Risk
Percent’s private credit investments, by definition, are high-risk investments—as are most (if not all) alternative investments. Though we aim to prevent defaults, they can still occur and leave investors with partial or total loss of principal and/or interest.
- In the case of previous defaults, and as will be the case of all future defaults, Percent has and will explore all options for maximum recovery of principal and interest. Like returns with any investment, success in recovery is never guaranteed.
- With that in mind, Percent’s high yields and short durations are why investors add our private credit deals to their diversified portfolios. Our detailed surveillance and due diligence are why investors continue to trust and invest with Percent for exposure to the latest deals in private credit.
Increased Diversification with Percent Blended Notes
Instead of investing in a single private credit investment, the Percent Blended Note gives investors diversified exposure to many of Percent’s existing platform deals.
- This allows investors to diversify across different investments and potentially reduce losses incurred by a default—all in a single investment.
Start investing in private credit today with Percent Blended Notes.