Last month, we shared glimmers of a spring thaw in the ABS market. We suggested the recent CHAI financing would mark the widest funding costs in the market for the near future. Today, we see 9 ABS deals in various stages of execution, improved pricing (see Avant’s latest deal for instance), and ABS investors scrambling to participate at current spreads. Investor sentiment has improved quickly.
Recent headlines – rising delinquency trends in certain segments, the impact of regulatory capital and risk retention on deal activity, and rising financing costs – are well trodden topics.
Much of the incremental news is at the firm-level, where platforms continue to develop new products and sources of funding. New forms of distributing loans from retail to real-money buyers via ’40 Act funds and CUSIPs are emerging. Platforms are launching captive asset managers to create a secondary bid for their bonds. Asset managers are winning large mandates from insurance companies via term-funded private credit structures that avoid asset liability mismatches.
Larger secular forces – negative real rates, bank retrenchment, and significant unfunded pension liabilities – bode well for platforms that can acquire customers and fund at scale.
Conferences:
- CEO, Ram Ahluwalia, will join a panel discussion entitled, “Alternative Lending Securitization and Similar Capital Sources,” on June 9th in New York—RSVP here.
- PeerIQ will speak at SCI’s 2nd Annual Marketplace Lending Securitisation Seminar on June 28 in New York.
Industry Update:
- Lending Club Boosts Projected Loan Losses, Raises Rates on Some Loans (WSJ, 4/20/16)
- Lending Club 8-K (SEC, 4/20/16)
- Goldman Shows the Big Problem for Banks: Revenue (WSJ, 4/19/16) Significant regulatory capital and liquidity burdens continue to pressure bank revenue and ROE.
- Goldman Eyeing Marketplace Shops (AB Alert, 4/22/16) Goldman looks to create alliance with existing originator—Prosper identified as possible target.
- Avant Loan Volumes Dropped Sharply in First Quarter (WSJ, 4/20/16) Avant experiences drop in volume from Q4 due to holiday demand; volumes double from prior year.
- Political, Business Leaders Size Up Stability Risks From Fintech Growth (Reuters, 4/19/16) The GAO is reviewing data security and the role of regulation in FinTech.
- AmEx to Launch Small Business Loans on Lendio (DeBanked, 4/20/16) AmEx partners with Lendio to launch SMB loans.
PeerIQ Mentions:
- Making Sense of the Lending Industry’s Rapid Changes (TechCrunch, 4/17/16) PeerIQ demystifies headlines with data and insight.
Lighter Fare:
- PeerIQ Software Engineer featured in New York Times article for his invention on Intel’s reality show, America’s Greatest Maker (NYT, 4/19/16).