KBRA Assigns Preliminary Ratings to Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1 (“CLUB 2017-P1”). This is a $363.098 million consumer loan ABS transaction that is expected to close September 28, 2017.

This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) second rated sponsored securitization and the first sponsored securitization consisting of “prime” unsecured consumer loans facilitated by LendingClub’s proprietary technology platform supporting an online marketplace that connects borrowers and investors by offering a variety of loan products originated by issuing banks through the platform, www.lendingclub.com (the “LendingClub Platform” or the “Platform”). Overall, Kroll Bond Rating Agency (“KBRA”) has rated three securitizations (LendingClub Issuance Trust, Series 2016-NP2, Arcadia Receivables Credit Trust 2017-1 and Consumer Loan Underlying Bond Credit Trust, 2017-NP1) whose origination was facilitated by the LendingClub Platform.

The LendingClub Platform was launched in 2007 and is operated by LendingClub. LendingClub has been a public company since its IPO in December 2014 and its stock is listed on the New York Stock Exchange under the symbol “LC”. The LendingClub Platform currently offers an array of products including unsecured personal installment loans to prime and near prime customers, patient and education financing and small business loans and lines of credit. In June 2016, LendingClub stopped its super prime program, and in October 2016, the Company announced that the Platform would begin to offer auto loans to borrowers who are looking to refinance an existing loan. LendingClub has historically sought to operate a true marketplace platform and did not typically use its balance sheet to purchase or invest in loans whose origination has been facilitated by the Platform. The Company is now using more capital to purchase loans and to contribute some collateral to its securitizations. The LendingClub Platform currently offers whole loans or fractional loans to a diverse mix of investors including banks, institutional investors, managed accounts and self-managed individual investors.

The transaction has initial credit enhancement levels of 38.55%, 24.00% and 8.40% for the Class A, Class B and Class C notes, respectively. Credit enhancement is comprised of overcollateralization, subordination of the junior note classes, a cash reserve account and excess spread.

KBRA applied its U.S. Consumer Loan ABS Rating Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Lending Club’s historical gross loss data. KBRA also conducted an operational assessment of the Lending Club Platform, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P1

   
Class   Preliminary Rating   Expected Initial Class Principal
A   A- (sf)   $244,234,000
B   BBB- (sf)   $57,362,000
C   BB- (sf)   $61,502,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available here.

Related Publications: (available at www.kbra.com)

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners.

Contacts

Kroll Bond Rating Agency
Analytical:
William Carson, Senior Director
646-731-2405
wcarson@kbra.com
or
Lenny Giltman, Managing Director
646-731-2378
lgiltman@kbra.com
or
Rosemary Kelley, Senior Managing Director
646-731-2337
rkelley@kbra.com
or
Haksun Kim, Director
646-731-2412
hkim@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical:
William Carson, Senior Director
646-731-2405
wcarson@kbra.com
or
Lenny Giltman, Managing Director
646-731-2378
lgiltman@kbra.com
or
Rosemary Kelley, Senior Managing Director
646-731-2337
rkelley@kbra.com
or
Haksun Kim, Director
646-731-2412
hkim@kbra.com