March Fund Commentary

Fund Commentary – March

The Coral Cove Private Credit Fund (the “Fund” ) returned 0.93% (Class I Units) in March, bringing the return for the quarter to 2.82%. Annualized returns since inception (January 2021) are 9.58%.

Fund Insights

• The Fund’s underlying portfolio (the “Portfolio”) has exposure to approximately 60 factoring, asset-based, lender finance, specialty finance, or similar type loans. Presently, the geographic weighting of the Portfolio is approximately 64% to the US and 36% to Canada. Of these positions, the largest portfolio weights are 43% to factoring, 32% to lender finance, and 11% to asset-based loans.
• Post-month end, the fund participated in a $3 Million term loan which was provided to a mining company in Canada, backed by Equipment & Real Estate, for the purchase of a servicing business. This client was an existing factoring client of one of the Liquid Capital Principals within the Garrington Group system.
• Recently, the approval rates for loans to businesses from banks have decreased. Although it seemed like larger banks would benefit from an influx of deposits due to people leaving smaller banks, the actual results in the US have been varied. The lending conditions have become stricter, and there are fewer deposits, especially in the small bank market in the US. This could impact the funding of loans for businesses in the future (by banks) which would help our origination flow.
• Deal activity continues to be robust. Origination volume and opportunities have remained steady and elevated over the past year. We are consistently seeing more viable transactions that are making their way through the system since the start of 2022. Based on what we are seeing, opportunities are expected to increase throughout 2023, which should provide ample opportunity for the Fund to continue to grow.