The international student loan securitization market has gained a new issuer in Prodigy Finance CM2021-1.
Kroll Bond Rating Agency UK Limited (KBRA) has assigned preliminary ratings to Prodigy Finance CM 2021-1 DAC and Prodigy Finance CM2021-1 LLC (combined “Prodigy 2021-1”).
The $303.5 million deal is backed by unsecured international student loans originated by Prodigy Finance. According to a KBRA presale report, Prodigy is a student loan issuer based in London that started lending to postgraduate students who are from French private school INSEAD.
The product was developed to address the hardship that international students experience in trying to obtain credit in order to fund their post-graduate studies. The firm has grown in recent years since starting to lend to these students beginning in 2007 and has originated $1.2 billion in loans to more than 22.500 borrowers located in 148 jurisdictions.
KBRA, in their presale report, said that, although the firm started originating student loans in 2007, most of the $1.2 billion loans that it has originated were from 2016 and after. The loans are usually for terms of more than 120 months and the static performance to date, although viewed as instructive, does not really represent performance through their full repayment or default cycle.
Additionally, KBRA said that, in comparison to traditional U.S.student loans that depend on FICO scores as benchmarks for possible future performance, the deal's borrowers do not have these scores so credit quality is assessed via Prodigy's internal assessments as well as probability of default scoring bands.
