Greetings,

US core inflation rose by 2.2% YoY in January. Inflation remains steady around the Fed’s 2% target. The Fed is holding off on raising rates in the near future propelling asset prices to an 8-week rally.

The Fed’s latest report on Household Debt and Credit showed that total household debt increased by $32 Bn (0.2%) to $13.54 Tn in 4Q2018, marking the 18th consecutive quarter of growth. Total debt is now $869 Bn higher than its previous peak, although it remains below its peak on a per-capita basis.

The report also showed that more than 7 Mn auto loans are delinquent for more than 90 days. This is the highest number of seriously delinquent auto loans ever and is driven mainly by subprime borrowers. Over 8% of subprime borrowers are seriously delinquent on their auto loans, but this percentage is still well below its peak of 9.7% seen in 2010.

In regulatory news, Square’s ILC charter application has managed to avoid the backlash that Walmart’s application received. This is mainly because Square’s primary business is seen as being closely aligned to banking, while Walmart was trying to diversify its retail operations into financial services.

The Conference of State Bank Supervisors (CSBS) has agreed to implement 14 of the recommendations made by FinTech companies like PayPal, Western Union and SoFi. The CSBS will develop a state examination system that simplifies the examinations of nonbanks operating in multiple states and build an online database of state licensing guidelines.

Banks continue to diversify their product offerings. Citigroup has launched a new consumer loan product and a new high-yielding savings-account as part of its digital bank. The Citi Flex Loan will allow select existing Citi credit card customers to convert part of their credit lines to a loan with a fixed APR. The Citi Accelerate Savings account is an online savings account offering an interest rate of 2.36%.

Morgan Stanley has acquired Solium Capital for $900 Mn in its biggest acquisition post-crisis. Solium Capital manages the employee stock plans for nearly 3000 corporations. MS wants to court the employees of these companies, as they get wealthier, for its wealth management business. Citi is focusing on mass market digital consumer banking offerings while MS is going after wealthier clients for its wealth management business.

JP Morgan has become the first US bank to launch its own cryptocurrency. JPM Coin is a digital token that will be used to instantly settle transactions between clients of its wholesale payments business.

There is some good news regarding the Equifax data breach that affected nearly 140 Mn Americans in 2017. The data seems to have disappeared and has not made its way to criminal websites. Identity theft and fraud losses may remain substantially lower than initially expected.

In FinTech financing news, Nav a small-business lending marketplace, raised $45 Mn from GS Principal Strategic Investments among others. Nav will use the funds to expand its platform and to support more funding partners.

CommonBond, an online student loan refinancer, has raised a $750 Mn credit line from GS, Citi among others. CommonBond will use this credit facility to expand its lending operations.

In securitization news, KBRA has rated the senior tranche on Upgrade’s second ABS deal A. UPGR 2019-1 is a $227 Mn securitization. The collateral pool has 21,670 loans with an average loan size of $11,181 and a weighted average loan term of 44 months.

KBRA has rated the senior tranche on Upstart’s fifth ABS deal A-. UPST 2019-1 is a $231 Mn securitization. The collateral pool has 21,892 loans with an average loan size of $11,770 and a weighted average loan term of 57 months.

 

PeerIQ’s Webinar on Tools for Whole Loan Investors

Thank you for joining our webinar on Tools for Whole Loan Investors! We discussed:

  • Valuation of “pass-through” CUSIPs made up of unsecured personal loans
  • Stress testing to forecast future cash flows and price loans in various scenarios
  • Curve extraction from TransUnion market data or originator-specific history
  • Automated Benchmarking to monitor adverse selection and portfolio alpha

In case you missed it, you can view the recording of the webinar here.

Source: PeerIQ

 

PeerIQ’s Loan Performance Monitor (as of December 2018) 

We are pleased to release our latest MPL Loan Performance Monitor which tracks the delinquency rates, cumulative losses, cumulative prepays and transition matrices using public marketplace lending data that comprises unsecured consumer loans originated by Marketplace Lenders.

Some highlights from the latest (as of December 2018) report are:

  • Delinquencies on the 2017 vintage in the first 24 months have remained higher than those on the 2015 and 2016 vintages, in spite of tightening underwriting standards.
  • Cumulative loss rates on the 2017 vintage are lower than those on the 2015 and 2016 vintages. Cumulative losses on the 2015-2017 vintages are outpacing those on earlier vintages.
  • Cumulative prepayments have picked up, with the 2017 vintage paying significantly faster than all prior vintages.

Source: PeerIQ

Industry Update: 

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