Marketplace lending company Funding Circle (LSE:FCH) announced on Wednesday it has completed its first asset-backed securitization (ABS) of US small business loans originated through its platform. According to Funding Circle, a total of $198 million was raised through the securitization, which marks “the debut of Funding Circle’s US securitization sponsorship capability,” as well as it is the fifth securitization of Funding Circle business loans globally.
Funding Circle also reported that the transaction is rated by two ratings agencies, with its senior tranche earning an A- (sf) rating from Kroll Bond Rating Agency and an A3 (sf) rating from Moody’s Investors Service. It was revealed that the oversubscribed transaction saw a demand from 18 institutional investors, ranging from asset managers and private credit funds to insurance companies and sovereign wealth funds.
While sharing more details about the securitization, Bernardo Martinez, Funding Circle U.S. Managing Director, stated:
“Funding Circle’s inaugural US securitization is a major milestone in our journey to build the infrastructure where any institutional investor can efficiently lend to small businesses. With our global securitization program and sponsorship capability, we’re proud to expand access to a traditional fixed income asset class for new types and styles of investors, while also providing diversified funding for small businesses to grow and drive the economy forward.”
The completion of the securitization comes less than two weeks after Funding Circle announced it has lent over $10 billion since launch in 2010. At the time of the announcement, Martinez revealed:
“We are incredibly proud that Funding Circle has become small business’ first choice for loans. We look forward to continuing to build on the strong foundations we have put in place to help many more businesses in the years ahead.”
Funding Circle further explained it has facilitated loans from over 90,000 investors to 72,000 small businesses and it manages a loan portfolio of $3 billion (£2.5 billion) in the UK, $1 billion in the U.S., and an additional $175 million (€156 million) and $129 million (€115 million) in Germany and the Netherlands
