Lend Academy by Peter Renton (April 29, 2016)
The CEO of PeerIQ talks about securitization, the recent headwinds facing the industry, his view of the future and much more.
As the marketplace lending industry has matured the supportive ecosystem is being built as we go. One of the key players in this developing ecosystem isPeerIQ. They are bringing institutional quality analytics to an asset class that previously didn’t have it.
In this episode of the Lend Academy podcast I talk with Ram Ahluwalia, the CEO and founder of PeerIQ. We spend almost 20 minutes going in depth about how securitizations work and we also talk about what Ram and his colleagues are seeing when it comes to trends in credit performance.
In this podcast you will learn:
- How Ram’s background in traditional lending and as an asset allocator helped him see the opportunity for PeerIQ.
- What PeerIQ does exactly and what markets they are serving.
- The motivation for platforms to use securitization as a funding souce.
- The basics of how a securitization works.
- Why some investors can only participate in this asset class through a rated securitization.
- The mechanism that allows bonds to be created from a pool of loans.
- How different tranches work within a securitization.
- The different kinds of credit enhancements that can be used in a securitization.
- An explanation of PeerIQ’s securitization tracker and how many securitizations they have tracked.
- Ram’s perspective on the Moody’s downgrade of Prosper’s recent CHAI securitization.
- What Ram thinks of the increased delinquencies recently announced by Lending Club.
- Why we should expect higher delinquencies in general in the long term.
- Where the real story is in all the negative press we have seen.
- What was the unifying theme that Ram heard at the recent LendIt conference.
- Why Ram is still optimistic about the long term future of the industry.
[Original article available here.]