Secured U.S. Fintech Yield Pool - Update

Goldfinch community,

We’re happy to announce that the entire Threecolts position held by the U.S. Fintech Yield Pool was sold last week. The loan was sold at par, which means that the pool received 100% of the outstanding loan amount. We will receive accrued interest in early January, in accordance with the loan’s interest payment schedule.

We view the sale at par plus accrued interest as an excellent deal for the U.S. Fintech Credit Yield Pool and Goldfinch community overall, considering that interest rates have risen by more than 500 basis points since the Threecolts loan was originated in late 2021. Rising interest rates typically result in mark-to-market losses on fixed interest rate loans*.

The Threecolts business continues to perform strongly, but we felt that it was in the best interest of the community to sell our interest in the loan early, so that we could proceed with returning funds to Backers of the U.S. Fintech Yield Pool and to Senior Pool participants overall.

The total repayment amount (excluding accrued interest) is $13.04 million, or 65% of the outstanding balance of the U.S. Fintech Yield Pool. This cash will be sent to the Senior pool, which we expect will be used to redeem FIDU holders who are in the redemption queue.

As a reminder, the Warbler Labs team has committed to backstop the remaining amount of the US Fintech Credit pool as discussed in this post by the Warbler Labs team(Update on Stratos Pool). For context, the senior pool holds a total of $16.0m of exposure to the US Fintech pool. The remaining $3.0m ($16.0m less the proceeds of the loan sale of $13.0m), as well as the principal held by backer investors (excluding Warbler and Stratos) will be made whole while we work with the Warbler team to recover the remaining value from other assets remaining in the US Fintech Credit pool.

*the Threecolts loan did have a floating rate feature, although with a cap, which was reached early on in the 2022 interest rate hiking regime.