UK peer-to-peer loans score AAA securitization

By Daniel Lanyon on 14th July 2017

P2P/Marketplace LendingAlternative CreditProperty

Landbay originated loans have been included in a highly rated pool of mortgages.

UK peer-to-peer loans score AAA securitization

Landbay originated loans have been included in a highly rated pool of mortgages. 

More than £30m of loans originated by UK peer-to-peer platform Landbay have been included in a larger securitization of buy-to-let loans awarded an AAA rating.

Securitization, as a means of funding, is a strong trend in the marketplace lending/alternative credit space, with the US in particular seeing strong growth in volumes.

This is the first time, however, that a UK/European platform has scored a top rating from a pool of its assets with only US-based marketplace lending giant SoFi previously scoring AAA for its student loan backed pools.

The £309.5m securitization - TWIN BRIDGES 2017-1 PLC – reflects loans mostly originated by Paratus AMC, a mortgage asset manager and servicer, with 87.7 per cent coming from Paratus directly and 12.3 per cent originated by Landbay on behalf of the firm.

The chart below shows the breakdown of the various notes of the overall securitization.

Source: Bloomberg

AltFi Data’s Aloysius Fekete said: “The senior AAA rated tranche represents 82 per cent of the issued notes which is typical of BTL securitisations, if a little conservative.  As a comparison, the most recent securitisations from BTL lender Paragon Group sized their senior AAA notes at 85 per cent,” he said.

The French investment bank Natixis was the sole arranger and book runner on the transaction, which has a settlement date of 21 July 2017. The pool of nearly 1300 buy-to-let mortgages are mostly interest only loans (96 per cent) and the average principal outstanding balance per account is £188,417.        

Nearly two-thirds of the mortgage assets are located in London and the South East of England. The weighted average seasoning is 8.3 months and the weighted average Remaining Term 20.3 years.

The chart below shows Landbay’s monthly origination volumes in the past 12 months. 

Comments

Simon Potter, Empiridum Ltd.

19 Jul 2017 11:33am

It may be misleading to say a 'highly rated pool of mortgages', the issued Notes are rated not the underlying collateral. AAA is partly achieved by structuring, as Aloysius points out 18% of hard credit enhancement, plus the 2% RF.