Now Finance have announced a landmark securitisation, pricing a transaction worth $200 million worth of personal loans.
The fintech lender priced a majority of motor vehicle loans and personal loans, with NAB acting as the major arranger and lead manager for the deal.
While securitisation is very common in the mortgage space, it is less widely seen in the personal loan market: indeed, Now’s deal is one of the first seen in Australia.
Moody’s, the ratings agency, have recently mentioned the strength of the personal loan securitisation market, which may lead to more deals like this in the future.
“Mortgages have dominated the securitisation market globally and in Australia, but we are increasingly seeing other collateral types coming onto the market,” said James Cunningham, Treasurer at Now.
“A lot of non bank lenders who are building out various lending niches are starting to come to market with season portfolios and recognition from ratings agencies, and I think the real benefit for everyone is that, as this asset class builds out, there’s a virtuous cycle for the product issues and end clients. As we are more efficient, so the product becomes more efficient.”
Though this type of securitisation is new, the type of loans that are being offered by new are exactly those which tend to go over well in the marketplace.
“We’re very much focussed on middle market Australia: people with good credit. That’s a very crowded market in the payment solutions, whether that be credit cards or Buy Now, Pay Later, and there’s a real point of difference for our product in that we cater to those higher transaction sizes.”
“Our product is resonating: unsecured between $5 and $50k and secured between $15 and $100k. That’s more material purchases, and I think the product caters well for that. We’ve also introduced zero fees across the product set and that’s gone over well with the broker channel, as well as with consumers.”
