OnDeck Capital, the marketplace lender that recently launched a partnership with JPMorgan Chase, is marketing bonds backed by its own small business loans, according to DBRS.
OnDeck Asset Securitization Trust II, Series 2016-1 is only the firm’s second term securitization.
OnDeck targets small businesses that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining affordable or timely financing. OnDeck has developed a platform using predictive modeling, data aggregation and electronic payment technology, which enables it to service this target market. After starting lending in 2007, it has made approximately 81,000 term loans (as of December 31, 2015) to more than 42,000 customers, the aggregate principal balance of which totaled over $3.6 billion, according to DBRS.
As of December 31, 2015, OnDeck had approximately $834 million in outstanding term loans to approximately 21,000 obligors.
OnDeck, based in New York, serves as both the originator and servicer for the Series 2016-1 transaction. Portfolio Financial Servicing Co. is the backup servicer.
The trust will issue two tranches of fixed-rate notes: $211.54 million of class A notes are provisionally rated ‘A’ by DBRS and $38.46 million of class B notes are rated ‘BBB.’
The transaction will revolve for a two-year period that ending in April 2018, after which principal on the notes will be paid down sequentially, beginning with the Class A notes.
Credit enhancement levels are sufficient to support DBRS’s assumptions of 33.1% and 23.5%, respectively, with respect to the stressed cumulative net default/loss for the class A and class B notes