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Lending Club is looking to price two more ABS deals this quarter, as the company plans to shrink its proportion of bank funding in the year ahead, executives said on a third quarter earnings call this week. -
The removal of the student loan interest deduction under the Republicans’ new tax plan may seem inconsequential compared with the average sum of debt per borrower, but it will fan the flames of a growing student debt crisis.
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Tesla priced an ABS offering backed by solar lease and power purchase agreements originated by its SolarCity subsidiary late last week, selling the bonds at the tight end of price guidance.
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A panel of investors speaking at a conference this week said that securitization was driving the growth of the marketplace lending industry, and that the combination of investor demand for yield and borrower demand for credit is creating a “perfect storm of good things” for the asset class.
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The great and the good of the European Union were lining up last week to pat themselves on the back for passing securitization reform, including the framework for the long-awaited simple transparent securitization label, but officials should forget the self-congratulatory crowing, and work to make ABS a more attractive funding option for issuers.
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It’s like Mark Twain said: “History doesn’t repeat itself, but it often rhymes.” So it goes with US consumer credit since the financial crisis. In an age of record low fixed income yields and trusted (though untested) models for underwriting consumer credit, the market may be wearing blinders when it comes to risks in the sector.
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Consumer lenders are tapping securitization less and less, according to S&P Global Ratings, with the securitization of consumer loans at “record lows” across sectors — though rising interest rates could reinvigorate ABS backed by short dated collateral.
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Marketplace loan ABS investors are showing a higher tolerance for risk, flocking to recent marketplace loan securitizations which are increasingly backed by a higher proportion of risky loans and structured with deeper capital stacks.
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The senior class of P2P Global Investments’ MOCA 2017-1 UK marketplace loan ABS transaction was priced at the wide end of guidance, though the final spreads further down the capital stack pointed to a strong execution for the deal.
