ABS East; Stripe’s Lending Arm; Madden Decision
By Vy Phan
September 15, 2019
Greetings,
Securitization professionals are gearing up for the ABS East Conference in Miami starting this Sunday Sep 22nd.
Marketplace lending ABS issuers are accelerating their deal activity to get ahead of potential recession talk concerns. Topics at the conference include GSE reform, the latest on the shift away from Libor, and promising developments in the non-agency mortgage market.
The most notable development this week is the news that $23 Bn payments company Stripe is launching a lending business. A new business unit, Stripe Capital, is a lending arm focused on financing customers’ businesses. Stripe intends to announce a bank partner that will fund loans. Stripe will capture a fixed percentage of daily sales.
Stripe is mirroring other payments companies that have since built lending capabilities – notably, Square and PayPal. Stripe believes it can compete in an already crowded small business lending market (OnDeck, Kabbage, Fundera, Funding Circle, etc.) due to its data & channel advantages stemming from its payments business.
In financing news, student loan fintech “College Ave” locked down a $300MM securitization and a AAA rating this week. The securitization was co-led by both Barclays and Goldman Sachs. Affirm, led by Max Levchin, is reportedly close to wrapping up a $1.5 Bn debt and equity financing with Thrive Capital and Spark Capital leading.
On the regulatory front, the FDIC and OCC weighed in on the Madden decision in a joint amicus brief. We recommend Peter Renton’s summary of the brief which is positive for lenders and investors.
Conferences:
- PeerIQ at ABS East 2019 from Sep 22nd to Sep 24th. Feel free to shoot us a note if you’d like to catch up!
Industry Update:
- Challenger banks apply pressure with fee cuts (American Banker, 9/8/2019) Non-traditional challenger banks provide consumers with banking features, like “enhanced overdraft” with Chime, while traditional banks continue to suffer from customer dissatisfaction.
- APIs are the next big SaaS wave (Tech Crunch, 9/6/2019) The ability to deliver software through online subscriptions was revolutionary, now look for application programming interface (API) to do the same.
- Synchrony Financial bets on Americans' growing obsession with their pets (CNBC, 9/8/20219) One year after acquiring a pet insurance company, rising fintech Synchrony Financial is taking a chance on CareCredit – another financing option.
- High Debt Levels Are Weighing on Economies (WSJ, 9/8/2019) Since the financial crisis, debt owed by governments, businesses, and households globally is up nearly 50%, directly playing a role in low global interest rates.
- Payments giant Stripe debuts a credit card in its latest step into the financing fray (Tech Crunch, 9/10/2019) One week after announcing the launch of Stripe Capital, payments startup Stripe has announced the launch of a corporate card for business customers.
- College Ave Student Loans Receives a AAA rating for its Third Successful Securitization (PR newswire, 9/10/2019) Student loan fintech lender secured a AAA rating and $300MM securitization underwritten by GS, Barclays this week.
Lighter Fare:
- Florida Man Parks Smart Car In Kitchen So It Won’t Blow Away (Huffpost, 9/5/2019) Man parks tiny car in his home in an effort to avoid cleaning the house, both frustrating his wife and confusing their canines.