CLUB Certificates act as a pass-through security, an alternative to investing in long-term and illiquid loans.
Leading marketplace lender LendingClub has reached the milestone of issuing $1bn worth of its CLUB certificates to institutional investors. The certificates launched in December last year.
Club certificates were introduced as a new channel for institutional investors following feedback from LendingClub’s product buyers. It was designed as an alternative to investing in a whole loan, which can be illiquid with long maturity dates.
Institutions can invest in the certificates, which are structured as pass-through securities. This means the loans are pooled together, much like a securitisation – only without the tranching. This becomes a more liquid alternative to investing in individual loans directly.
Valerie Kay, CCO of LendingClub, said in a statement that the investment instrument has “expanded and diversified LendingClub’s investor base”.
The lender hopes to continue broadening its investors’ access in 2019 by launching a variety of new products and structures.