Funding Circle has completed the second securitisation of loans from its US portfolio and the seventh across all its markets.
The peer-to-peer business lender said that the $252m (£194m) securitisation – Small Business Lending Trust 2020-A (SBIZ 2020-A) – was oversubscribed and backed by 25 institutional investors including insurance companies, asset managers and pension funds.
“Funding Circle’s second US securitisation furthers our commitment to providing institutional investors with access to this investment class,” Bernardo Martinez, US managing director of Funding Circle, said.
“With our global securitisation programme and sponsorship capability, we can provide diversified funding for small businesses and deliver capital to this critically underserved borrower segment.”
The package was sponsored by Funding Circle – meaning it organised the deal and under US regulation remains responsible for managing the risk – comprised 1,930 loans. It received an A- rating for its senior tranche from ratings agency Kroll and an A3 from Moody’s.
A pre-sale report by Moody’s said the portfolio is well diversified across different loans that aren’t too long.
However, it warns that there are risks in funds only being spread across three sectors, services, healthcare and construction.
The transaction is sponsored by Funding Circle itself, which Moody’s highlights as a risk warning, as it is still relatively new and inexperienced in terms of securitisations.
Funding Circle’s first US securitisation took place in August 2019.
Its first US securitisation deal was valued at $198.45m (£163.85m), comprising four tranches of notes.