PeerIQ Monthly Update: February 2016

Going into March and ABS Vegas, we see a thaw in credit markets with a step-up in issuance and trading activity.

We thought we would summarize recent deal activity and share our observations on the market.

• Year-over-year top-line growth remains substantial – ~4x year-over-year growth in Consumer ABS and ~8x growth in student lending ABS as measured by our Securitization Tracker

• Spreads have widened largely driven by investor concerns of a global slowdown and credit performance

• The effect is particularly pronounced for emerging ABS issuers in the unsecured consumer installment loan market

• Emerging ABS issuers are competing for the same pool of dollars and bumping into each other on the calendar. Deals are getting done, albeit at higher financing costs

• Recent ratings actions and increased delinquencies are increasing the appetite for trading and tools to separate macro concerns from underlying credit risk

• Leading investors we interact with increasingly believe the table has largely been set for Marketplace Lenders that seek to fund via securitization

• The view is that the proliferation of 300+ smaller US originators will simply not be able to generate meaningful issuance volume to attract investors and face a difficult road ahead

• Larger marketplace lending platforms need to continue to invest in building their ABS brands and standardization to improve reliable access to the securitization markets going forward

At the deal level, we continue to see a proliferation in deal structures and variations:

• Recent deals from Avant and Loan Depot for instance show meaningful differences in structure from prior deals

• The CHAI shelf, which historically has consisted of Prosper loans, now welcomes Marette loans

• Kroll is increasing its activity in the space and appears to be focusing on emerging issuers

Against the foregoing, the need for analytical tools to help institutional investors originate, compare, finance, price, and exchange the risk is as strong as it’s ever been.

Several members of the PeerIQ management team will be at ABS Vegas this week.

Please stop by the ‘Development of Securitization in Marketplace Lending’ or the ‘The Future of Regulation in US Marketplace Lending’ panel and say hello.

1.  Conferences

• ABS Vegas in Vegas (Feb 28-March 2)
  • Development of Securitization in Marketplace Lending, Mon 1:45pm PST
  • Future of Regulation in US Marketplace Lending, Mon 4:35pm PST

• PeerIQ will be speaking at LendIt in San Francisco on April 11^th