More detail has emerged on Lending Club’s inaugural securitisation.
Last week we learnt that Lending club is working alongside Goldman Sachs and Jefferies Group to securitise its loans. The world’s leading consumer lending marketplace has never ventured down the securitisation route before. Lending Club loans have been securitised indirectly in the past, but the platform has never taken the lead in a bond offering.
According to a recent Bloomberg article, Jefferies will be buying and packaging up a minimum of $150m of Lending Club loans, to be sold on to investors in May. There’s no further specifics yet on Goldman’s plans. Initial coverage of the bond offering would suggest that Goldman will focus on the marketing of loans to borrowers with strong credit scores, with Jefferies focused on marketing bonds with lower credit quality loans underlying them.
We now learn that the planned Jefferies transaction will be backed by loans with an average interest rate of 28.5%. Goldman’s offering will hone in on debt at the lower end of the “prime” spectrum.
The loans that will make up Lending Club’s initial bond offering will be deposited into a special-purpose vehicle called LendingClub Investment Trust. Rumour has it that the asset-backed securities that will be issued by the LendingClub SPV will have credit ratings as high as A- from Kroll Bond Rating Agency.
Lending Club CEO Renaud Laplanche hasn’t always appeared overly keen on the securitisation route. In a call with analysts last October, Laplanche pointed to Lending Club’s solid foundation of retail investors as a major competitive advantage – allowing the platform not to have to rely too heavily on securitisation markets for funding.