Capital Markets Update – Week of May 1, 2020 (audio)

In an effort to provide even greater transparency around our offerings and our investment platform, Prath Reddy and the capital markets team provide weekly updates.

Listen below for Prath’s most recent views on our short-term note program and the current private credit landscape from Cadence’s perspective.

Please find the transcript for this video below.

Hey everyone Prath Reddy here, Head of Capital Markets at Cadence. Thank you for tuning in to this week’s market update for the week ending May 1st, 2020. The objective of these updates is to provide insights that are relevant to participants in our STNP, AKA short-term note program market. 

Checking in on the broader markets this past week, equities look like they’ll be ending higher here since last Friday’s close. This follows a pretty choppy, but ultimately upward movement and rally throughout April as we saw both the Dow and S&P posting the biggest monthly gain seen over 30 years since, I believe, January 1987. On the credit side, primary markets across all the major asset classes remain open and active with plenty of headline issuances across both the investment grade and high yield markets. And at least one CLO pricing in the ABS Market, as well. On the secondary side, spreads continue to grind lower, as well as investors have been flooding back into the market. Investment grade spreads tightened about 20 to 30 basis points over the week and high yield followed suit in a more amplified manner with spreads about fifty to a hundred basis points tighter depending on where you’re looking on the credit spectrum. 

Honing into our corner of the universe and the STNP Market – we had another active week with just over $3.8 million pricing across two new issues. This brings our total monthly issuance volume to $13.3 million and just over $50 million year to date. In terms of flows, we did have another net outflow this week which pushed us into modestly negative territory for the month by a few hundred thousand dollars. In terms of rates, both offerings this week priced at the wide ends of the range and fell just shy of intended size targets. The first deal to close was an offering with Northwest Capital, which runs a book of factory receivables for primarily logistics companies in the Midwest and has been pretty well insulated from the COVID-19 crisis. We attempted to consolidate two of their outstanding notes, totaling 3.2 million into a single one month note yielding 12 and a half percent for a full roll and ultimately came up about $300,000 short to print the deal at 2.9 million. 

The other deal to close this week was with Zinobe, who just announced this week an exclusive partnership with the Colombian government to originate government guaranteed loans to COVID-19 affected borrowers. So congrats to the entire Zinobe team there on an incredible accomplishment. The offering here was to roll the full $960,000 two-month note at 16% APY and we ultimately came up about $30,000 short to price it at $930K. So all in all demand has only improved over the last few weeks despite shortfall seen on these two offerings and both of the current two deals that we have in the market right now at the time of this recording are seeing strong demand, as well from a variety of investor types across both accredited retail and institutional. 

Away from the deal flow side, we are continuing to make material headway into releasing more performance reports. In addition to Wall Street Funding and SellersFunding, all account holders can also find Cherry’s daily reports. We are planning to roll out a few more over the coming weeks in addition to a glossary of terms that’s been updated and content around explaining our reports, as well as all the various terms like days past due and annualized default rates. So definitely stay tuned on these fronts, but that’s it for this week’s report. Thanks for listening in and we’ll be back next week.


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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