Summer hasn’t slowed down developments in the P2P sector. We saw a host of new fundraises (e.g. Credit Benchmark, Upstart), UBS has announced its entry, and the US Treasury has kicked off an inquiry to better understand developments in the space. Indeed, we will be in DC next week for the UST’s Marketplace Lending Forum, meeting with regulators, banks and other p2p operators. I look forward to the discussion and reconnecting with many of you there.
And of course, July continued to reflect the acceleration of P2P securitizations, highlighted by last week’s announcement of Citigroup’s CHAI deal. In the deal, the banking giant secured a provisional A3 grade on the senior tranche on $377 million of bonds backed by Prosper loans —the highest such grade before seen in P2P consumer loans (outside of student loans).
We have also seen several publicly listed closed-end and UCIT funds announce in recent weeks. These products are a more natural way for retail and institutional investors to access the P2P market with the advantage of liquidity and daily pricing. These products expand the base of eligible investors and are a more stable source of funding to P2P platforms.
We prepared a short research piece (see attached) comparing the CHAI transaction to CCOLT (BlackRock’s securitization of Prosper loans back in February), noting both the many similarities, but key differences and factors driving the rating. I hope you enjoy the piece, and if you have any questions, please reach out to chat.
Hiring Update: Introducing Alex Alvarez, our newest Engineer
- We are very excited to welcome aboard our newest Software Engineer, Alex Alvarez! Alex is a full-stack developer from Goldman Sachs, where he worked developing a suite of cyber intelligence applications. In his free time, this foodie-turned-engineer enjoys playing esoteric sports (Ultimate Frisbee, Squash, Table Tennis, to name a few), cooking and traveling.
- Open roles: We’ve opened up two new roles; as always, referrals are greatly appreciated.
- We’re looking for a multi-faceted Office Administrator, who will support many day-to-day activities, as well as building out our marketing and social media assets and processes. We think this is a fun role with a large runway for growth for the right candidate.
- We’re continuing to invest in our tech team to support new set of features on our roadmap. We’ve opened up a role for a Software Developer that will focus on data transformation and integration as we scale our data onboarding capabilities.
- For more information about both roles, and others, check out our website and send all resumes to firstname.lastname@example.org.
In addition to the CHAI transaction, SoFi made big news with another securitization. Also, there is a lot of recent chatter and swaps and the growth in that market.
- Shadow Casting (CFA Institute, July/August 2015 issue) Interesting article from the CFA journal on shadow banking including a component on P2P, and finishing with smart policy prescriptions.
- Online Lender SoFi Gets First AAAs on Its Student-Loan Bonds (Bloomberg, July 29, 2015) Great news for SoFi getting top grades to $387 million of their notes.
- Funding Circle to Float Fund to Invest in Small Business Loans (FT, July 29, 2015) Funding Circle will be able diversify its funding sources and secure a stable source of capital to purchase loans on their platform.
- Van Eck Overland Launching a Closed-End Fund Investing in Online Loans (Lend Academy, 7/28/15) Expect several more closed-end funds to launch over the next year.
- Investors Boost Clearing of Credit Swaps (FT, 7/28/15) Without waiting for the finalized regulations, investors are stepping up clearing activity and are eager to revive single name CDS.
- Banks Pitch Swaps as Alternative to Buying Stock (WSJ, July 29, 2015) Regulation pushing banks to recommend swaps over securities.
- Nobody Knows How Much Bonds Cost (Bloomberg View, 7/28/15) Important to promote liquidity in the P2P ABS market.
- Bloomberg Given Green Light for EU Swaps Platform (Financial News, 7/25/15) Big advancement for UKs swap market.