Social Finance recently completed one of the largest sales of bonds backed by consumer loans this year. Twenty eight investors participated in the $380M offering, and demand for the offering was nearly three times that amount. The successful securitization is surprising to some in the context of the scandal at Lending Club and slowdown at other peer-to-peer lenders such as OnDeck.
Money managers have been subjecting online lenders to greater scrutiny since LendingClub’s board forced out company founder and Chief Executive Renaud Laplanche in early May after discovering he presided over a series of alleged breakdowns in internal controls. Mr. Laplanche has said that “events occurred on my watch where we failed to meet our high standards.” But in SoFi’s case, Mr. Fanlo said bond buyers were less concerned with the events at LendingClub than about macroeconomic events such as the coming U.K vote on leaving the European Union. The least risky portion of SoFi’s bond deal commanded a yield of around 2.4 percentage points above benchmark rates, a spread that was several percentage points lower than that of similar securitizations of unsecured loans made by other lenders earlier this year.