Chart Of The Week: Cannabis Credit Markets Are Hot Across the Credit Quality Spectrum
The cannabis debt market is HOT! The five issues shown on the chart were all completed in the third quarter of 2024 (with two weeks remaining) and account for approximately $632M of proceeds, greater than any quarter since the fourth quarter of 2021.
The graph shows the effective cost of the transaction on the vertical axis with the Viridian Credit Ranking at the time of the transaction on the horizontal axis. The close fit of the regression line (R-squared of .91) shows that the market is accurately taking into account the credit risk of the issuers in its pricing of new issues.
The most significant outlier is the 12.75% cost for TerrAscend, which we had expected to carry a higher yield. TSND’s less-than-stellar credit ranking was partially attributable to the liquidity pressures that the new financing alleviated. The company is currently ranked three notches better at #11.
The Jushi (OTC: JUSHF) transaction was for first-priority notes, which are now quoted at closer to 17%.
All of the …