A portfolio of Funding Circle loans that were securitised in 2019 have been upgraded by ratings agency DBRS Morningstar.
The loans were packaged in the third version of its Small Business Origination Loan Trust, issued in 2019.
DBRS Morningstar has upgraded the ratings on the Small Business Origination Loan Trust 2019-1 DAC class B notes from A to AAA.
The class C notes have been upgrade from BBB to AAA and the class D notes have gone from BB to D.
The ratings agency said the bonds have been reviewed based on better portfolio performance.
As of the September 2021 payment date, loans one to three months in arrears were at 5.9 per cent of the non-defaulted outstanding portfolio balance, Morningstar said.
That was down from 27.3 per cent at previous annual review.
Only 0.4 per cent of the non-defaulted outstanding portfolio balance was still benefiting from forbearance measures, the ratings agency said.
“The forbearance measures introduced by Funding Circle combined with the support of government loans granted to the borrowers over the past year improved the collections on the portfolio by preventing the delinquent loans from further migrating into the delinquency buckets as well as reducing the portion of the portfolio more than three months in arrears,” Morningstar said.
The peer-to-peer business lender has completed seven securitisations globally, four of which comprised its UK loans.