Funding Circle embarks on £164m US securitisation
FUNDING Circle is securitising some of its US loans for the very first time.
This will be the fifth time that the publicly-listed peer-to-peer business lender has gone to the debt capital markets but the first time it has done so outside of the UK.
Funding Circle operates in the UK, the US, Germany and Holland.
Read more: Alternative lenders embark on new securitisation deals
Its US securitisation deal is valued at $198.45m (£163.85m), comprising four tranches of notes.
Ratings agency Kroll has assigned preliminary ratings to classes A, B, C and D of the securitised loans, of A-, BBB, BB and B+ respectively.
Kroll said that it also conducted an on-site operational review of Funding Circle at the company’s San Francisco offices in January. It will review the final transaction documents, legal structure, operative agreements and legal opinions prior to assigning final ratings.
Funding Circle’s chief risk officer Jerome Le Luel on Thursday noted uncertainty in the US market, saying that changing central bank policy pointed to “an indecisive approach”.
Read more: Securitisation forecast to fuel growth of peer-to-peer lending
He also warned of a possible turn in the business cycle after a decade of prosperity in the country.
“We have also started to see some wider business volatility, which has fed-through to the projected returns for loans taken out in recent years,” he said.
“In light of this, we have strengthened the US loanbook ahead of any changes to the business cycle, by tightening our lending criteria and increasing the interest rates paid by businesses.”
Funding Circle’s last securitisation was a £232m UK deal last month, which was arranged by Deutsche Bank.
Funding Circle and Zopa are the only two UK P2P lenders to have securitised their loans to date.
