Residuals trading picks up in marketplace loan ABS

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By Jennifer Kang
28 Apr 2021

Investors are seeing more personal loan ABS residuals trading as the asset class expands and liquidity improves. After seeing how the loans performed through the pandemic, more market participants feel comfortable going down the capital stack in marketplace loans.

Residual interest, or the equity piece, makes up the riskiest part of the capital structure, and confers control and ownership over the portfolio. In consumer ABS, residuals are typically retained by the issuer. In auto ABS, for example, Toyota is often seen retaining the equity portion ...

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