PEER-TO-PEER securitisation in the US hit a record $2.3bn (£1.8bn) in the third quarter, with more than half of the loans now backed by assets, according to new research.
The sector is now valued at $12.6bn, with $5.4bn of that coming from the year to date, said New York-based P2P risk analytics firm PeerIQ.
“Although marketplace lending origination volumes have declined at some platforms, asset-based securities (ABS) issuance is increasing as is the proportion of loans funded by ABS,” said the study. “The percentage of loans funded by ABS is over 50 per cent.”
The average deal size has also continued to grow, up to $267m in 2016 compared to $64m in 2013.
PeerIQ predicts the value of MPL ABS issuance to be as high as $10.3bn in 2017, with Wall Street heavyweights Goldman Sachs, Morgan Stanley and Citi set to take top positions on the lending league tables.
All but one deal issued in the third quarter was rated by at least one ratings agency, the research said. PeerIQ expects the vast majority of future deals to be rated, as issuers look to broaden their base of eligible investors.
The analytics firm also predicts an increase in ABS volumes and more repeat issuance in the fourth quarter.
“As marketplace lending loan growth rates in the US have accelerated over the last few years, lenders have become increasingly reliant on institutional capital, with many platforms particularly focused on securitization as core pillar of funding,” said the report.
“We anticipate greater participation in the securitization space as one-off issuers seek to become repeat issuers to optimize deal cost and capital market distribution. We expect other issuers to adopt repeat-issuer best practices.”
On Wednesday, ratings agency Moody’s predicted that the UK is set for its own securitisation boom, as fintech consumer lenders look to grow their businesses.