More visibility than ever before
June 21, 2022
One of the biggest releases these past few weeks has been the new syndication process that our Capital Markets team is now actively using and our third party underwriters will be starting to use very soon. The past few deals have been incredibly fascinating to watch as some have gone exactly according to plan and others have forced us to rethink how we market and attract investment into these opportunities.
We launched, perhaps fortunately, with two deals that were opportunistic and we knew would be harder to close. Demand trickled in slowly, allowing us to figure out our processes internally across Capital Markets and Servicing and prepare us for the deals ahead that would have hundreds of investors coming in. [ ] and the blended note with [ ] coverage were deals that ended up closing far lower than we had hoped for, even if we didn't need the full amounts. In the case of [ ], we can always go back out to market again in the coming weeks to get to the target size over time. With the blended note, we issue them every month and the goal is to continue to encourage investors to gradually shift from doing individual deals and into more the "set it and forget it" mentality. This also allows us to have more confidence in closing deals as the blended notes invest across all eligible borrowers.
As we went out to market with [ ], we were able to really see the new syndication process in action. The moment we launched the deal, hundreds of investment requests came in and it was just magical to see. The order book was building in real time and we could tell exactly what the market was willing to bear for our products from a deal size and deal price standpoint. With the overall challenging macro conditions though, deals like [ ] are inevitably going to be harder to close as retail investors in particular retrench and rotate away from investments altogether and into cash. The onus then shifts to the Capital Markets team to manage the relationships with all of our borrowers going forward around how they can best navigate this new normal in the market.
The next deal, though, showcased exactly what happens when the process and the product work in tandem. [ ] launched as a much smaller deal and one that likely seemed more approachable of a deal size to close relative to [ ]. In turn, we oversubscribed this deal by over 1.25x and it turned the tide in the borrower's favor as they now could command how much money they wanted and at what APY.
There's so much that goes into a deal and so much that happens behind the scenes so you can't always take the syndication statistics at face value but this added transparency has made the ability for us to go back to borrowers with conviction around the why is going to be all the more valuable in this current environment as things are rapidly evolving.
We have several more deals coming on deck and I can't wait to see how these order books build 📊
