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Peer2Peer Finance News | August 18, 2019

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Funding Circle back in securitisation market with £187m deal

Funding Circle back in securitisation market with £187m deal
Suzie Neuwirth

FUNDING Circle has entered the securitisation market for the third time, with a £187m portfolio of UK loans originated by the peer-to-peer business lender.

Alternative asset manager Pollen Street Capital is the equity sponsor of the deal, having backed Funding Circle’s last securitisation eleven months ago.

While Funding Circle operates in the UK, the US, Germany and the Netherlands, the loans included in the securitisation are just from the UK.

The senior tranche was awarded an Aa3, A (high) and AA- rating by ratings agencies Moody’s, DBRS and Kroll respectively, Funding Circle said on Tuesday.

On closing, the spread over one-month Libor on the senior tranche was 105 basis points.

This is higher than Funding Circle’s second securitisation which was priced at 75 basis points, but lower than the 220 basis points on its first debt-packaging transaction in 2016.

“This latest securitisation further validates the attractive, risk-adjusted returns that are being generated for investors in SME loans,” said Sachin Patel (pictured), chief capital officer at Funding Circle.

“Funding Circle is proud to facilitate direct investment into the backbone of the UK economy, driving much-needed job creation across the country as a result.”

Funding Circle and Zopa are the only two UK P2P lenders to have securitised loans to date. A recent report from credit agency DBRS predicted that securitisation will play a key role in the growth of P2P lending in the UK and Europe.

“The securitisation market offers marketplace lending participants a valuable tool for lending platforms, or their institutional backers, to obtain funding,” the report said. “The use of securitisation allows marketplace lenders to increase the velocity of their committed capital in order to allow continued new lending and volume growth.”