NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 (“CLUB 2017-P2”). This is a $330.0 million consumer loan ABS transaction that is expected to close December 6, 2017.
This transaction is LendingClub Corporation’s (“LendingClub” or the “Company”) third rated sponsored securitization and the second 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, KBRA has rated four securitizations (LendingClub Issuance Trust, Series 2016-NP2, Arcadia Receivables Credit Trust 2017-1, Consumer Loan Underlying Bond Credit Trust, 2017-NP1 and Consumer Loan Underlying Bond Credit Trust, 2017-P1) 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. In November 2017, given the trend of higher delinquencies and prepayments in the F and G grades, LendingClub announced plans to reduce the volume of F and G grade loans originated and proactively test underwriting and pricing criteria. During the testing phase, the F and G notes will not be available on the platform. LendingClub historically sought to operate a true marketplace platform; however, is now using more capital to purchase loans and to contribute 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 35.45%, 26.05% and 10.83% 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 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.
For complete details on the analysis, please see KBRA’s pre-sale report, Consumer Loan Underlying Bond Credit Trust 2017-P2 Pre-Sale Report, which was published today at www.kbra.com.
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Preliminary Ratings Assigned: Consumer Loan Underlying Bond (CLUB) Credit Trust 2017-P2 |
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| Class | Preliminary Rating | Expected Initial Class Principal | |||
| A | A- (sf) | $239,400,000 | |||
| B | BBB (sf) | $34,600,000 | |||
| *C | BB (sf) | $56,000,000 | |||
*The Class C will be split into Sub-Class 1 and Sub-Class 2 Notes which will be issued in the aggregate principal amount of $56,000,000. The allocation of such aggregate principal amount between these sub-classes will be determined at the time of pricing.
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 entitled Consumer Loan Underlying Bond Credit Trust 2017-P2 Representations and Warranties Disclosure.
Related Publications: (available at www.kbra.com)
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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 (NAIC) as a Credit Rating Provider (CRP).
