LendingClub Corp., a pioneer of online marketplace lending, said it raised rates for borrowers again to reflect a gloomier economic outlook and worse-than-expected performance for some of its riskiest loans.
The firm boosted interest rates on new loans by a weighted average of 23 basis points, mainly for lower credit grades, according to a filing on Wednesday. A basis point is one-hundredth of 1 percent.
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Designating the loans as credit risks gave Crescent broader authority to sell them as it shrank the CLO, allowing it to liquidate the remaining portfolio without approval from subordinated noteholders.
A fintech's transaction is the first to go through S&P Global's preliminary rating process with VantageScore 4.0 used to underwrite for 100% of the loans.
Credit premiums remain subdued and downside protection across risky assets is still relatively cheap. Even the strain in market plumbing has been concentrated.
The deal is backed by recently originated, 30-year fixed-rate mortgages with an average combined loan-to-value ratio of 75.1%, according to Morningstar DBRS.
The rating agency said CLO diversity insulates them from sector-specific shocks, fortifying them against the current weakness in software.
