Last week I wrote about SoFi and their plans to create a securitization of their student loans. Little did I know that another company has actually beaten them to the punch and closed on the first securitization ever of p2p loans.
Eaglewood Capital who I profiled in January, closed on a $53 million securitization deal this past Friday making it the very first such deal involving loans originated by Lending Club. I caught up with Jon Barlow, the head of Eaglewood Capital, to find out more.
While Barlow was tightlipped about the details of this deal he did provide some background. This $53 million pool contained loans that were part of the Eaglewood Income Fund I, LP, the flagship fund of Eaglewood Capital. The $53 million number represented approximately half of the total assets in the fund that launched in November last year. The fund invests in loans based on their proprietary credit model with a weighted average interest rate in the 12-14% range, meaning a B-C grade average.
One of the interesting pieces that was mentioned in the press release is that the loans in this securitization were from borrowers with a weighted average income north of $90,000. That is well above average borrower income for all loans, which is around $70,000. The loans in this securitized pool were exclusively 36-month loans purchased on the whole loan platform at Lending Club.
A Large Insurance Company is the Primary Buyer
While there was no mention of exactly who the buyer was other press reports indicated it was a large insurance company. The pool of loans was not rated by any major credit ratings agency. Barlow also said that one of the advantages for Eaglewood and their investors with this deal was that it lowered their cost of borrowing and diversified their funding sources.
Eaglewood has been offering investors leverage on Lending Club loans in their main fund. Currently that leverage is slightly below 3 to 1. Eaglewood also offers unlevered separately managed accounts for investors who do not want to be in a fund structure but still want to take advantage of Eaglewood’s credit model.
Right now Eaglewood is dealing exclusively with Lending Club; there are no plans to add Prosper to the mix any time soon.
Barlow expects to put together more of these securitizations in the future. While there is no set timetable he thinks as the industry matures there will be more large investors looking to buy securitized pools of loans. And Eaglewood will be happy to put these deals together.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.