Private lenders have spent the last five years making ever larger loans to junk-rated companies, grabbing leveraged lending deals away from banks. Now the direct lenders are muscling in on funding consumer loans, cutting into banks’ asset-backed securities business.
Castlelake LP, a private credit firm, said it participated in a more than $140 million financing for consumer lender LendingPoint this year, backed by personal loans. Hyland Hill Investment Partners has set up a $250 million fund to buy debt including consumer and small business loans from finance companies. Atalaya Capital Management has recently set up a $1.8 billion fund to target private asset-backed securities as well.
