OnDeck Prices $250 Million Securitization

OnDeck announced the pricing of its $250 million securitization. The online lender will issue notes in two classes consisting of $211.5 million initial principal amount of Class A Notes and $38.5 million initial principal amount of Class B Notes with final legal maturity in May 2020.

Notes were priced with an annual yield to expected maturity of 4.250% for class A notes and 7.754% for class B notes.

“We believe the successful pricing of our securitization demonstrates the strength of our hybrid funding model, which includes warehouse funding, securitizations and whole loan sales,” said Howard Katzenberg, OnDeck’s chief financial officer in a news statement.

As the alternative lending industry proliferates, companies scramble to secure long-term capital and diversify risk. The hybrid model for funding is one way of doing that as investors demand higher yields from loans sold by marketplace lenders. Moody’s downgraded loans consumer loans originated by Prosper on account of missed payments of underlying loans. And earlier this month (April 12th), Citigroup said that it will stop securitizing loans made by Prosper.

However, this does not signal gloom and doom yet. This week, Lending Club revisited securitization and confirmed that it is reportedly in talks with Goldman Sachs and Jefferies Group to put together its first big bond offering.

Will OnDeck’s loans face the same market trepidation?