Capital Markets Update – Week of June 19, 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. This week, Charlie Lienau, Director of Capital Markets, fills in for Prath.

Listen below for Charlie’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.

Hi everyone, this is Charlie Lienau, Director for the Capital Markets team here at Cadence. Thank you very much for tuning into this week’s STNP market update for the week ending June 19, 2020 where we provide news and insights that are relevant to our short-term note program market.

Quick snapshot on the broader public markets this past week. U.S. equities were trending higher across the board up compared to last Friday’s close, following news on Monday that the Fed was going to start buying individual corporate bonds (not only ETF’s). Furthermore, some recent economic reports, such as May consumer spending, some housing numbers, and manufacturing activity, have given rise to the notion that the recovery might be faster than expected. However, some caution was observed this week, as well as COVID-19 cases, have been gradually increasing roughly since Memorial Day weekend in several US states and a resurgence of some outbreaks in other countries.

Switching gears to the fixed income markets, benchmark treasuries yields increased slightly, with the 10-year now hovering right around 0.71%, which is about 6 bps higher than Friday close. And taking a look at the major credit markets, spreads continue to grind tighter across the board with the IG index now hovering around 147, about thirteen tighter over the week, and high yield index at 577, about thirty-five tighter than last week. The primary markets on both sides of the credit spectrum continue to see a record pace of issuance across a variety of sectors and ratings.

Now, diving into the STNP Market this week.

Taking a look at this week in terms of flows, we have had positive net flows every day of the week, resulting in a total of over $1mm.

Looking at each deal specifically: This week we were live with three transactions: 3-S, which was a $1.4 million, three-month offering with Pollen VC, which does continue to remain one of the most in-demand programs now. Given demand seen during the Dutch auction, we ultimately launched the deal 50 basis points inside 3-R, at an indicative 9.50% APY, and it was fully subscribed in a day to all existing note holders, so a healthy negative new issue concession here. This deal will formally price and close next week on June 23rd. We were also live with 5-J, which is a $3.6 million, three-month offering with Northwest Capital, which is a roll-over of 5-F and 5-I. Pricing remained at the prior 13%, which helped drive considerable demand. Similarly to Pollen, this transaction was fully subscribed over the course of four days to existing holders of the prior notes. This deal will formally price and close next week on June 27th.

We are currently live with a transaction with 12-C linked to SALT, which is currently in syndication period for an up to $2mm 3-month note, with a 9.25% APY, and is currently about 82% subscribed with both existing and new investors. This transaction is a meaningful upsize from 12-B which has $750k outstanding. This deal will formally price and close next week Monday, on June 22nd.

As we mentioned in prior updates, following the economic effects ofCOVID-19 across the United States, Solar4America, the underlying obligor to TradeRiver, was unable to make a timely repayment of its obligations under TradeRiver’s CPOs supporting Short Term SolarInstallation Financing 8-B and 8-C, that were due on May 19, 2020. Today, as part of a tender offer for the existing notes, and after extending the underlying CPOs, the Cadence team expected to close 8-E, only for existing investors of 8-B and 8-C to participate into, as part of a restructuring plan to repay the principal in the next 6 months. We will continue to keep all impacted investors updated on further developments in the coming weeks and months.

Looking ahead to this upcoming week we will have new offerings with Zinobe and Arctos Capital open for investment that we auctioned this week. The capital markets team continues to work hard in onboarding new originators that we plan to launch for auction in the next few weeks providing investors with more opportunities.

That’s all from us this week, but thanks again for tuning in and look forward to catching up with you again soon.


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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