LC is going to issue some bonds which are securitizations of loans.
Relatively poor article in Wall St Journal. Copy & paste journalism takes sentences and bits if issues from prior article and pastes em in. Nothing official. This is a rumor piece. Probably informed rumor, but no official info available yet.
http://www.wsj.com/articles/lendingclub-looks-at-new-deal-to-crack-tough-market-1461663002Article says nonsensical stuff such as
Recent securitization transactions that have been sold to investors were largely done at much higher yields, reflecting concerns about the creditworthiness of borrowers and the economy. Buyers of a March bond offering based on Prosper Marketplace Inc. loans demanded yields as much as five percentage points higher than a similar deal late in 2015.
No. And by the way "much higher" is not meaningful English unless you say much higher than what. LC hasn't said what the interest rates on these new bonds are going to be, so you can't say something else was higher than these bonds that the article is supposedly talking about. You can't just sell a securitization at a much higher interest rate than the stuff inside it, 'cause where would the money come from to pay that interest? They are referencing the recent articles about the securitizations of Prosper loans without being specific, who had their risky tranches sell at a higher rate than they sold the previous time. That has little meaning to you or me or LC, so is particularly misleading in this article. We don't even know whether LC is going to divide this up into tranches based on performance as so many of the securitizations do.
It makes sense for LC to take this step. Its just a repackaging. They package their product several different ways now, to appeal to different kinds of investors. This is just another packaging. They create bonds packaged up in little bitty pieces (notes) that they sell to retail investors. They already have passed the regulatory scrutiny necessary to issue bonds. Why not package up some big bonds (securitizations) to sell to some big guys who are used to buying a product in that shape? If LC doesn't take the lead, then other folks are going to do securitizations, and LC loses control. (Has already started.) If those 3rd parties do stupid stuff, then you'll end up with bad PR, as you'll be mentioned in every article about the train wreck.
Will be interesting to learn the details of how these things are going to be packaged, but none of that info is available at this time. How the things will be split into tranches. To whom they will be available. What data will be available, and to whom. At this point there is no SEC filing. No press release. Just rumor that LC will be "discussing" this with some big investors this week.
