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MOCA gets away, senior tranche priced 75bps better than SBOLT




By Ryan Weeks on 27th September 2016


The first ever securitisation of marketplace loans to consumers in the UK has priced.

 

MOCA 2016-1, the inaugural securitisation of Zopa loans, has priced. The pricing makes Fitch’s landmark rating of AA official, while also confirming Moody’s Aa3 rating. The complete breakdown of the pricing is available below.

 

Class

Size (GBP)

Size (%)

Rating (Fitch/Moody’s)

WAL (yrs)

Coupon

(Over 1 month £ Libor)

Price

A

114,000,000

75.9

AA-(sf)/Aa3(sf)

0.91

+145bps

100.00

B

7,500,000

5.0

A(sf)/A2(sf)

2.25

+290bps

100.00

C

7,500,000

5.0

BBB(sf)/Baa2(sf)

2.53

+400bps

100.00

D

9,000,000

6.0

BB(sf)/Ba3(sf)

2.94

Retained

Z

12,144,000

8.1

NR/NR

N/A

Retained

 

Funding Circle pulled off the UK’s first securitisation, SBOLT 2016-1, in April of this year. Moody’s again assigned the senior tranche a rating of Aa3, while S&P rated the same tranche BBB.

 

The senior tranche of MOCA priced at 1 month Libor +145bps, a full 75bps tighter than the senior tranche of SBOLT, despite both tranches having received the same rating from Moody’s. The B and C Notes in MOCA and SBOLT were also given the same ratings by Moody’s – A2 and Baa2 respectively. But the B Notes in MOCA were priced 135bps tighter than the B Notes in SBOLT, and similarly the difference between the two sets of C Notes was 150bps.  

 

The disparity in pricing between the UK marketplace lending sector's debut securitisation and its second (SBOLT and MOCA respectively), notwithstanding the differences in underlying collateral, could suggest that European ABS investors are gradually becoming more comfortable with marketplace loans as an investable asset class.

 

"This is an exciting milestone in Zopa’s journey," said Jaidev Janardana, CEO of Zopa. "The securitisation process has involved detailed scrutiny of our underwriting and servicing practices from both ratings agencies and investors. The market reception validates the robustness of our platform and our prudent lending policies. It brings Zopa personal loans further into the public spotlight and expands the universe of people who can participate in peer-to-peer lending. This supports our mission of providing a fairer financial future to even more customers."

 

Simon Champ, CEO of MW Eaglewood Europe, the manager of P2P GI – the original investor in the securitised Zopa loans, also weighed in: “This transaction marks a positive step in enabling us to deliver on our objective to both diversify the sources and reduce the cost of our funding. The funds raised by the issue will now be progressively deployed in line with the investment strategy and our intention remains to steadily increase our leverage ratio to 100%.”

 

Speaking exclusively to AltFi, Champ added that there was "very strong demand" for the deal, as is reflected in the pricing. "I think this a watershed moment in terms of opening up the asset class to European institutions who don’t necessarily want to buy P2PGI," said Champ. "Hopefully this will further institutional adoption and lower the cost of leverage.” 

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