What Marketplace Lenders Can Learn from CLOs

May 17, 2016

excerpt, Asset Securitization Report (May 17, 2016):

"Marketplace [securitization] is in some cases like old middle market CLOs," said Joseph Beach, a partner at law firm Cadwalader, Wickersham & Taft, said, referring to deals backed by loans to smaller companies. He said there are two "big steps," or structural changes, that would make securitizations of marketplace loans more closely resemble CLOs. The first is to introduce revolving, rather than static, pools of loans. "There's no reason why, right now, a marketplace term ABS could not put revolving pool," Beach said. "You can call that a CLO structure."

A more important distinction between securitizations of marketplace loans and CLOs, according to Beach, is that CLOs are backed by loans from a diversified pool of originators. "To me that's more interesting," he said. "Will any aggregator go to multiple [marketplace] originators?"

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