ML-Implode News - More Trouble in Bonds Backed by Peer-to-Peer Loans

In mid-December,Â 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 ofÂ a securitization of "peer-to-peer" loans with aÂ creditÂ rating andÂ aÂ 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 tranchesÂ of two similar securitizations that had been previously sold to investors.
... The question now is whether P2P loans prove to be the vanguard of a wider downturn in consumer lending, or simply riskier than more traditional forms of credit.
... The bonds under review for downgrade by Moody's are known as Citi Held for Asset Issuance, or CHAI. Consisting of loans originated through Prosper Marketplace Inc., the second-biggest P2P lender in the U.S., following LendingClub Corp., the bonds were put together by Citigroup Inc. and are three of the 40 or so P2P securitizations currently outstanding, according to data from Morgan Stanley.

Relevant:

More Trouble in Bonds Backed by Peer-to-Peer Loans