Goldman, Jefferies Said to Start Marketing LendingClub ABS Deals

Jefferies Group is planning to bundle at least $150 million of consumer loans from LendingClub Corp. into bonds and sell them to investors in May, in the first of a series of such deals, people with knowledge of the matter said. 

Goldman Sachs Group Inc. is planning to also buy loans from LendingClub and package them into bonds, one of the people said. LendingClub, which makes loans to consumers over the Internet, aims for deals like these to help cut funding costs.

The Jefferies transaction in May will be backed by riskier consumer loans with an average interest rate of 28.5 percent, one of the people said, while Goldman Sachs’s will be tied to debt at the lower end of the "prime" scale. 

For the May sale, loans will be deposited into a special-purpose vehicle called LendingClub Investment Trust that will issue asset-backed securities with short maturities and credit ratings as high as A- from Kroll Bond Rating Agency, one of the people said.

The online-lending industry has mushroomed since 2009, with more than 160 startup firms having emerged. Many of these companies originally sold their loans to individual investors online, but in recent years institutions and banks have bought more and more of the debt. Big buyers of online consumer loans have included JPMorgan Chase & Co., BlackRock Inc. and Citigroup Inc.

Wall Street firms have bought loans from companies like LendingClub and Prosper Marketplace Inc. and packaged them into bonds before. 

LendingClub has increased interest rates in recent months, a move it said will cover more losses if the economy slows. The company found some of its riskiest loans were performing worse than expected.

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