[Issuer] Harbor Update May 2022

image

Harbor Pool Updates

  • Maker Utilization: 788K DAI, 2mm DAI expected utilization in June
  • Pool Value: 3.65mm DAI at month end, back to ~5mm DAI in June

Although utilization is a bit down, new originations have picked up in May since the launch of our Indian operations in April. Primarily, the scope of origination in India is receivables finance for SME exporters. Receivables Finance provides diversification to the portfolio and allows for exposure to investment grade obligors. Harbor plans to replicate our origination strategy and enter a few more key markets this year. Geographic diversification will also help mitigate some of the risks around supply chain disruptions triggered by Covid lockdowns, most notably the current situation in Greater China.

Market Conditions

Shipping times, material and component scarcity and production shutdowns continue to ripple up and down the supply chain. Working capital gets tied up in production and in transit inventory which creates a liquidity squeeze. We are seeing this firsthand with new and existing counterparties in the portfolio. We touched on this briefly last month in our market recap. Its likely that these issues will be short lived as demand and production capacity start to normalize at the latter part of this year. In the meantime, we will continue to assess the supply chain disruptions and the impact on our portfolio.

Opportunities and Growth

“Every problem is an opportunity in disguise.” – John Adams

The divide between buyers and suppliers’ requirements when it comes to payment terms continues to widen to cope with longer operating cycles. Harbor’s trade finance programs satisfy these requirements for buyers and suppliers alike. That said, we see a lot of opportunity to finance these trade flows, especially those coming out of emerging markets. In the coming months we’ll be expanding into new markets and we look forward to sharing with the community.

As always, please feel free to contact us with any questions here in the forum or at info@harbortrade.com.

2 Likes