Portfolio Monitoring During COVID-19
April 13, 2020
Over the past few weeks, the COVID-19 crisis has created unprecedented levels of uncertainty and deeply shifted social and economic life as we once knew it. The pandemic directly impacts individuals, families, communities, and economies around the globe; indeed, it impacts all of us, including those businesses and communities that we seek to serve at Calvert Impact Capital.
Our mission – to use private capital in innovative and collaborative ways to create an equitable and sustainable world – is now more relevant than ever. Our team is dedicated to ensuring that we not only help communities recover and rebuild from this crisis, but that we build back even better. We have spent decades forging the path between communities and capital markets, putting investor capital to work in challenging, under-resourced markets to create environmental, social, and financial returns. We pride ourselves on being responsible, proactive, and transparent stewards of investor capital, through all market conditions, and we are committed to sharing insights from our portfolio with our investors as we work through this unprecedented time.
Now—as always—our portfolio partners are embedded within their local communities, supporting affordable housing, healthcare, education, small businesses, and other critical services across the globe. While our portfolio partners are well positioned to help communities navigate the new reality, they face a new reality themselves–one with newfound challenges, risks, and obstacles as a result of an uncertain economy. Our staff has been in close touch with our portfolio partners and industry peers to understand how the current economic conditions and market movements may impact our borrowers and their underlying activities and communities. We are actively engaged in risk mitigation while working in partnership with our borrowers to understand their capital needs and the needs of their communities. This understanding will help us respond with the appropriate tools as the situation evolves.
Beyond working directly with our portfolio partners, we are closely monitoring sector-specific risks, as well as global macro-trends that have implications for our portfolio. These trends include increasing unemployment rates and resulting reduction in household income, restrictions on gathering in businesses and community centers resulting in reduced services and revenue, and travel and global supply chain disruptions. As a result of these trends, our portfolio partners and the businesses and nonprofits that they serve are grappling with reductions in customers and revenue and increases in costs as they adjust their operating models. Additionally, if financial institutions pull back lending, lines of credit, and other financial products, there will be limited liquidity for many businesses and nonprofits across the globe.
Despite these risks, our strategy of primarily lending to financial intermediaries and diversified funds, rather than to direct businesses and projects, has afforded us a diverse portfolio that is largely cushioned by capitalized balance sheets, subordinate tranches of capital, and credit enhancements. We stand at the ready to help our partners navigate this difficult time, and we are confident that they know their customers well and will support their local communities in meeting newly urgent needs.
At times like these, we are especially appreciative of our investors and their financial advisors that invest with us. The Community Investment Note® is designed to provide investors with an accessible and risk-mitigated way to invest for social, environmental, and financial returns. Our portfolio diversification and disciplined risk management has contributed to one hundred percent repayment of investors’ principal and interest since 1995.* We also currently have more than $119 million in net assets, guarantees, and subordinated capital that protects investors against potential losses in our portfolio.
As our CEO Jenn Pryce wrote a couple weeks ago, “Calvert Impact Capital is a part of an industry built to address enduring problems and to move capital into the communities that need it most.” Our team’s focus is ensuring near- and longer-term support for communities—especially those most vulnerable—that are impacted by the social and economic fallout of the pandemic.
*Past performance is no guarantee of future results. As with all investments, there is risk. Please read our prospectus before investing.