Leading global ratings agency Moody's has assigned ratings to Prospa’s Australian small business loan asset backed securities (ABS) trust.
This is the first rated ABS issuance backed by unsecured small business loans in the Australasian market. It is also one of the few that have been issued globally and rated by one of the big three credit rating agencies.
A total of $83.25million in debt securities were rated as follows: $64.8m Class A Notes assigned A3; $14.6m Class B Notes assigned Ba2 and $3.7m Class C Notes assigned B3.
Prospa’s Joint Chief Executive, Beau Bertoli, said: “We are delighted to have been assigned ratings by Moody’s for our small business loan ABS trust. This is an important milestone in the diversification of our funding that will appeal to a broader group of fixed income institutional investors.”
The initial underlying receivables are short-term, high yield, unsecured, amortising loans made to Australian small businesses. The initial average term of the unsecured loans is approximately 12 months, with the maximum loan term of 24 months. The average loan size is $26,000.
All business loans benefit from a personal guarantee generally from the small business owner or a director. Secured loans are also eligible to be included in the collateral pool and have a maximum term of 36 months.
As of March 2018, Prospa had funded over $500 million of business loans. The company uses technology to be able to offer customers same day approval and fast funding.