Online lender Prosper Marketplace has hired Credit Suisse and Jefferies to sell a US$501m bond backed by its consumer loans, according to deal documents viewed by IFR.
The securities - the second to be issued from its own shelf - are expected to come up for sale next week. They will be offered in three tranches of notes with ratings of A-/A (Fitch; Kroll Ratings) to B+ (just from Kroll) that repay within one to three years.
Whispers are already circulating in the EDSF plus 100bp area for the 0.81-year A-/A+ tranche, according to one investor. That is well inside the 125bp pricing of a comparable trade from the company in May, IFR data shows.
Whispers for the 2.08-year BBB-/BBB tranche are ISwaps plus high-100bp to 200bp, and ISwaps plus 400bp area for the 2.89-year tranche, the investor said.
Buyside demand for off-the-run investments that offer a bit more yield is running high this summer and should bode well for the Prosper trade.
It revamped its securitization program last year after a previous tie-up with Citigroup collapsed, and sold its first bond from its own platform in May that met strong investor demand.
Prosper’s previous partnership with Citigroup - who bought Prosper loans and securitized them - came to an abrupt end amid extreme volatility. But under its own shelf, Prosper has gained more control over the quality and timing of its deals.
The new bond deal, called PMIT 2017-2, is also part of the company’s strategy to bolster slumping loan originations. The lender facilitated US$1.6bn of loans in 2014, US$3.7bn in 2015 and US$2.2bn in 2016, according to a Kroll.
The new deal is backed by almost 36,000 of its unsecured personal loans, which unlike a car loan means there is no hard asset to reposess to offset losses if the debt goes unpaid.
According to Kroll, the average borrower has a 704 FICO, US$84,071 of reported annual income and pays an interest rate of 17.12% on their Prosper loan.