Weekly Industry Update: PeerIQ Releases Q2 Securitization Tracker

• This quarter we see quarterly issuance of $3.0 Bn, representing 76% growth over 2Q2016.  To date, cumulative issuance equals $21.9 Bn across 92 deals.

• Multi-seller club deals and self-sponsored deals have emerged at several leading platforms.  All deals were rated in this quarter, including record-sized consumer deals from SoFi, large multi-seller deals from Marlette and Prosper, and the first self-sponsored, near-prime deals from Lending Club and Upstart.

• Dealer and rating agency participation continues to intensify. Fitch rated its first Consumer MPL, Prosper’s PMIT 2017-1, indicating broadening acceptance across ratings agencies. Goldman Sachs, Morgan Stanley, and Deutsche Bank lead over 47% of MPL ABS transaction volume. Noteworthy is the rising presence of BNP Paribas, which co-managed CLUB 2017-NP1. DBRS leads the rating agency league table, and Kroll dominates the unsecured consumer sub-segment.

• New issuance spreads continued to tighten and flatten—a credit friendly environment for securitization.  In 2Q2017, we saw spreads tighten in riskier tranches of consumer ABS, indicating strong investor appetite for MPL ABS paper in the market.

• Delinquency rates have continued to increase across in several verticals—such as subprime auto, student, and personal loans—due to exposure to riskier borrowers, a re-leveraging of consumer balance sheets, “loan stacking,” and shifting payment priority trends.

• Initial pricing is near record tight levels. Lending Club’s inaugural deal priced at Libor + 110, second only to Marlette’s MFT 2017-1 (L+100) on the Class A bond. Overall, spreads have tightened with greater investor acceptance in an overall “risk on” environment.

The full report can be access directly here.

PeerIQ in the News:

• Delinquencies on Car Loans, Credit Cards at Highest Levels Since 2012 (American Banker, 7/7/1) According to a new report from the American Bankers Association, late-payment rates for bank-issued auto loans and credit cards rose between January and March to their highest levels in more than four years.

• First Investors Pays up for AAA on Subprime Auto ABS (ASR, 7/7/17) First Investors Financial Services has increased the investor protections on its $226 Mn offering of bonds backed by subprime auto loans, FIAOT 2017-2.

• U.S. Labor Market Roars Back, Adding 222,000 Jobs in June (NYT, 7/7/17) The labor market experienced significant gains in jobs this past June, while wage increases disappointed.

• The High-Tech, Low-Effort Loans Winning Over Online Shoppers (AmericanBanker, 7/6/17) Klarna is considering various avenues to become more like a traditional bank and thereby better compete with banks.

• Goldman Sachs To Launch Mobile App For Consumers (PYMNTS, 7/7/17) Goldman Sachs is preparing to create a mobile product for retail banking customers, which would likely include services like its new personal loan platform Marcus, high-yield savings accounts, and a forthcoming robo-advisor platform.

• CAN Capital is Back in Business as it Receives Funding from Varadero Capital (Crowdfundinsider, 7/6/17) CAN Capital will immediately begin funding existing small business customers eligible for a renewal and new customers by working with select sales partners.

• Six Months After Acquisition, SoFi is Shutting Down Zenbanx (TechCrunch, 7/3/17) With its banking charter application still pending, SoFi has shut down Zenbanx and the corresponding services under its current structure.

• Inflation Amnesia Threatens the Fed (WSJ, 6/30/17) Low inflation numbers (up 1.4%,  the slimmest gain since late 2015) and corresponding low price expectations create a difficult challenge for The Federal Reserve.

• LendingClub Adds Ken Denman, Venture Partner at Sway Ventures, to Board of Directors (Crowdfundinsider, 7/5/17)  Current venture partner at Sway Ventures, Ken Denman joins Lending Club after serving as a CEO at several companies in need of a boost.

• Marlette Funding Closes $369 Million Securitization Transaction (Businesswire, 7/6/17) Marlette Funding closed its $369 Mn securitization, MFT 2017-2, the third securitization from its proprietary “MFT” shelf.

• What’s Driving the Growth in ‘Shadow Banking’ (CBR, 6/26/17) Much of the growth is due to regulations that have pushed banks out of traditional lending businesses as well as online technology that has lowered the barrier to entry

Lighter Fare:

• Summer Fintech Reading Ideas (LendAcademy, 7/3/17) Short reviews of five fintech books for your summer reading list.