Fitch Ratings Warns of Performance Degradation on P2P Loans

The ratings agency has put out a warning on the performance of loans on US peer to peer lending platforms; the current coronavirus crisis has resulted in high unemployment which will in turn impact whether borrowers can continue to pay; Fitch warned that p2p lenders particularly may be more impacted by these challenges compared to other consumer ABS sectors; part of the concern is that most companies were not originating a significant amount of loans after the last financial crisis, thus platforms are untested; Fitch Ratings shared this perspective on the ‘originate to sell’ models of these companies: “…a substantial proportion of their revenue is derived from the sale or securitization of loan originations…Furthermore, dislocations in the capital markets are impacting MPL sponsors’ funding sources and thus the sponsors’ ability to originate loans and generate origination fees.” P2P Finance News

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