Marketplace ABS Issuance up 86% from 2015 YTD

PeerIQ’s recent quarterly update on the marketplace lending sector outlines significant issuance growth during 2016.  In the third quarter “total issuance topped $2.4 billion this quarter—a record—and is up 41.1% from Q2” which brings cumulative issuance to $12.7 billion. For 2016, year-to-date “issuance of the sector stands at $5.4 billion as compared to $3.0 billion from prior year, an 86% increase as compared to a 10% decrease in non-MPL ABS issuance.” The piece points out that although loan origination volumes “have declined at some platforms, ABS issuance is increasing as is the proportion of loans funded by ABS.” Currently, the portion of marketplace loans funded by “ABS is over 50%.”

In terms of deal execution, the report highlights continued movement “towards rated securitizations at larger transaction sizes” and notes that except for one transaction in the third quarter, all were rated. In terms of transaction size, “growth in average deal size continued, growing to $267 million in 2016 as compared to $64 million in 2013.” New issue spreads on MPL deals continued to tighten this quarter. PeerIQ states that “across all segments in MPL, Q3 2016 saw spread compression across each part of the capital structure, indicating strong investor appetite for MPL ABS paper in the market.” The report estimates that in 2017, MPL ABS issuance will fall between $6.0 and $10.3 billion.

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