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ABS Vegas - 2019 Securitization Update; Square Charter Status

By Vy Phan

February 24, 2019

Greetings,

Minutes from the January Fed meeting released this week showed uncertainty over whether the Fed will raise rates at all in 2019. The Committee was also in favor of ending the reduction in assets on the Fed’s balance sheet. Global growth is slowing, and US inflation remains in line with the Fed’s target. A synchronized slowdown in global growth, driven by lower growth in the Eurozone and in China, presents downside risks in the short-term.   

In regulatory news, Square’s ILC charter application has received opposition from 37 community groups. The groups are concerned about Square’s CRA activities and have asked the FDIC to bolster Square’s CRA requirements. Before this letter from community advocates, nearly all of the 15 letters the FDIC received were in favor of Square’s bid. Square is the furthest along the path to getting an ILC charter and its experience will determine whether other FinTechs follow its lead.

Technology companies continue their strides into the financial sector. Apple’s and Goldman’s planned co-branded credit card will launch later this spring. Apple will also develop tools in its Wallet app that will help borrowers track their financial health. The card is part of Goldman’s foray into mass-market consumer banking.

Structured Credit Investor magazine explores the challenges facing the maturing marketplace lending sector. Issuers need to distinguish between the borrower experience that they provide and manage liquidity. The article also makes the point that the sector is ripe for consolidation, although we haven’t seen any M&A yet.

 

In this week’s newsletter, we will look at MPL securitizations that have priced in 2019. 

Join PeerIQ at ABS Vegas! 

PeerIQ is a Sponsor at ABS Vegas, Stop by Booth 38! 

PeerIQ, the leading risk and liquidity management platform in consumer credit, is showcasing its latest analytics tools for both whole loan investors and originators, including:

• Valuation of "pass-through" CUSIPs made up of marketplace loans

• Stress test scenario calculator to forecast cash flows in many future states

• Curve extraction from TransUnion market data or originator-specific history

• Automated benchmarking to quantify portfolio alpha

Please stop by Booth 38 or request a meeting!

2019 Securitization Update

The first two months of 2019 saw 5 securitization deals totaling $1.7 Bn in new issuance. The issuance volume represents a 23% drop over that seen in the first two months of 2018, as the market recovers from the volatility in equity and credit markets seen at the end of 2018. Total securitization issuance now stands at $46.2 Bn, with 147 deals issued to date.

 Source: Bloomberg, PeerIQ

Since September 2013, 96 Consumer, 41 Student, 10 SME, and 1 Mortgage deals have been issued. The total issuance in the Consumer space is $26.5 Bn, in the Student space is $17.2 Bn, and in the SME space is $2.5 Bn.

Source: Bloomberg, PeerIQ

The following 5 deals have been issued in 2019:

Deals issued in 2019 have priced wider than the corresponding previous deals due to market volatility. SOFI 2019-A, the only student loan deal to price in 2019, saw its senior trances price between 16 and 35 bps wider, and its junior tranche priced 25 bps wider as compared to SOFI 2018-D. Consumer deals priced wider on average by 3 bps on the As and 25 bps on the Ds as compared to the corresponding previous deals.

Industry Update:

 Lighter Fare: