2016 will be a fascinating year for P2P lending with a shake out expected of winners from the ones that were just growth in stead of quality focused!
The higher yields on offer from investing in the asset class have drawn interest from Wall Street, with asset managers, hedge funds, and banks participating in the space as they buy or bundle P2P loans into bonds that can be sold to investors. Sales of bonds backed by marketplace loans, which are asset-backed securities (ABS), have been a particularly bright spot for bankers seeking new sources of revenue and for P2P platforms aiming to diversify their funding away from more skittish individual investors.
In mid-December, shortly before Christmas, Moody's Investors Service gave a gift to investors in the fast-growing marketplace-lending space: the chance to buy a junior slice of a securitization of "peer-to-peer" loans with a credit rating and a spread of 6 percent over benchmark swaps. Eight weeks later, investors found Moody's in a much less generous mood. The rating agency announced it was considering downgrading the riskiest portion of the deal, along with the junior tranches of two similar securitizations that had been previously sold to investors. The reviews for downgrade were "prompted by a faster buildup of delinquencies and charge-offs than expected," Moody's said in a statement dated Feb. 11.