In December 2017 LendingClub launched their new certificate investment vehicle. This was a way for certain institutional investors to buy whole loans because the investment was structured as a pass through security with its own CUSIP and traded on OTC markets. These CLUB certificates became very popular and they have now issued more than $2 billion of these securities.
Today, LendingClub announced the next generation of these certificates: Levered Certificates. As the name implies this is way for investors get leverage on their LendingClub investment. This new structure will consist of two securities, an equity certificate that provides exposure to a pool of unsecured personal loans and a fixed rate note that provides stable term financing over the life of the certificate.
Both the certificate and the note will trade in the over-the-counter market with CUSIPs and are cleared through the Depository Trust and Clearing Company (DTCC).
LendingClub’s Chief Capital Officer, Valerie Kay, said this about the new program:
We continue to innovate on products and structures to enable more investors to participate in our marketplace and gain access to consumer credit. We expect our structured program innovation to further improve LendingClub’s balance sheet efficiency and reduce administration costs.
LendingClub’s Levered Certificates can be seen on dv01, Bloomberg and Intex with the “LCRT” ticker.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.