Capital Markets Update – Week of November 27, 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 Alex’s 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 this is Alex Pirro, a VP on our Capital Markets team here at Cadence and thank you for tuning into this week’s STNP market update for the week ending November 27, 2020, where we provide news and insights that are relevant to our short term note program market.

Taking a quick look at markets, despite the shortened week, major stock averages went into Friday up 2% on lingering positive risk sentiment from encouraging vaccine news and the prospect for a peaceful transition of presidential power. On Wednesday, weekly initial jobless claims came in worse than expected, posting the first back-to-back weekly increase since July. Wednesday’s data gave investors reason for pause amidst soaring coronavirus cases, fresh lockdowns and an extended deadlock in Congress over a new stimulus package.

On the fixed income side,10y and 30y treasury yields advanced on the week. Due to the holiday week, issuance volumes were light with only $300MM pricing in IG and overall yields for high yield bonds nearing record lows despite the bullish sentiment in across markets. It was also a quiet week across Primary ABS, with two deals priced ahead of the holiday, an auto lease ABS from Volkswagen and a middle market CLO from Owl Rock. 

Now diving into the STNP market, it was a busy week with $4.4MM pricing from three offerings. This brings our YTD total to just over $156m… which is over 4 times the amount issued in all of 2019. 

Looking at the technicals, 

  • It was another solid week of net inflows onto the platform, with roughly $3 million coming in ahead of the Thanksgiving Holiday… 
  • And in terms of demand we continue to note solid participation in our dutch auction process and overall breadth of final order books. 

On the issuance front we closed three transactions this week for a total of $7.8MM in issuance. First up was 3-AC, a $1.4MM note with Pollen VC, which was a 3-month rollover from 3-AA. This transaction carried an APY of 9.00%, which priced in line with its prior issuance for no new issue premium. Next up was 17-D, a $2.0MM note with Pulse Medical Finance, which was a 6-month rollover from 17-C. This transaction carried an APY of 13.25%, which was a 25bps negative new issue premium from its prior issuance.  Today we also closed 5-M, the $4.4MM subordinate note with Northwest Capital, an originator that offers receivable factoring services to small businesses in the Midwestern United States.  This was a 3-month rollover from 5-L, and priced with an APY of 12.50%, which was a 50bps negative new issue premium from its prior issuance. The deal was fully funded within two days. 

9-K was also live this week, the recent offering with Zinobe, which was filled by rollover investors. Additionally, 6-J, the latest issuance with Arctos was funded with a combination of rollover and new bidders up to the $1.7MM final size. 15-H also launched today for its rollover investors, the latest offering from Cherry. 

On our Cadence Prime side, we were pleased to announce WSF 2020-1 deal going live to investors, with notes backed by exposure to cash flows from a secured corporate term loan to Wall Street Funding.  This deal went live earlier this week and is currently 59% funded. For more details please refer to the “Opportunities” section of our website.  

So all in all, a busy week with another one lined up as we have several auctions going live today for deals that are set to launch early next week with names like ZayZoon, Axle and ThunderRoad. 

Additionally, on the surveillance side, we launched the latest reporting for The Smarter Merchant this week and are providing daily updates on our platform for our subscribed investors. All new programs coming online will have daily or weekly monitoring and we’re proud to deliver on the promise of unparalleled transparency across our STNP market.

Thanks for tuning in to this week’s update and we hope you have a great weekend! 

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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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