Peer-to-peer education lender Prodigy Finance has issued a $288m (£209.2m) asset-backed securitisation (ABS), expanding into the fixed income market for the first time.
The ABS is backed by a portfolio of $304m of loans that Prodigy Finance has financed, for postgraduate students attending universities and business schools since 2017.
The heavily oversubscribed senior tranche of $227m notes – of the $288m total issuance – have been given Class A ratings of Aa3 by Moody’s Investor Services, and A+ by Kroll Bond Rating Agency, and were priced at LIBOR +125bp from the day of launch.
A further three rated debt tranches were all pre-placed with a major global asset manager.
The transaction also introduces major public market investors and asset managers to Prodigy Finance for the first time and has been confirmed as aligning with ICMA Social Bond Principles 2021, as well as the UN Sustainable Development Goals.
“In line with our social impact commitment, we are excited that these social bonds give investors – who are increasingly embracing a strategy that goes beyond purely financial returns – the opportunity to contribute to achieving the UN SDGs,” said Dr Judith Rodin, chair of Prodigy Finance.
Read more: Prodigy Finance raises £760m in debt finance
“Our borrowers are typically underserved by traditional lenders who require collateral, a co-signer or a credit history in the country of study,” said Cameron Stevens, chief executive of Prodigy Finance.
“Prodigy Finance’s ability to originate loans based on a borrower’s future earnings potential allows for these students to have access to financing and ultimately access education at the highest ranked schools in the world.”
“This is a big milestone for Prodigy and we are very proud of what we have achieved,” said Neha Sethi, head of capital markets at Prodigy Finance.
“A successful debut rating, access to the capital markets and compliance with the ICMA Social Bond Principles are vital for the next stage of growth and for making postgraduate education accessible for our international borrowers.”
This follows Prodigy Finance seeing a 50 per cent year-on-year increase in loan applications from prospective students pursuing graduate studies including MBA and Engineering masters.