In the Press – Reuters – US SF WRAP-DRB plans first-ever student loan ABS

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  • Already has originated US$750m in loans
  • Could be 3rd online lender to securitize in sector

NEW YORK, June 3 (IFR) – Darien Rowayton Bank (DRB) is planning a debut securitisation deal later this year, its chief operating officer told IFR, putting it in line to be the third online lender ever to do so.

The bank has already originated US$750m in loans in the two years since it started offering borrowers the ability to refinance federal and private student loan debt entirely online, COO Aryea Aranoff said in an interview on Wednesday.

“Our lending target for this year is to hit US$1bn and after that (about) US$150m a month,” he said.

DRB is among a string of newcomers using a mix of data, lower rates and ease of the internet to refinance student debt.

Social Finance (SoFi), perhaps the best-known such name, has already outgrown its peer-to-peer roots to become a more typical consumer lender that also offers personal loans and residential mortgages. (Full Story)

In a sign of how easily it now attracts institutional money, SoFi this week is working on its fifth and largest securitization, a US$411.9m trade.

The deal will be the issuer’s first stab at selling riskier bonds to investors from its platform – a Baa3/BBB rated credit tranche – according to pre-sale reports from Moody’s Investors Service and DBRS.

And others are making headway.

Online startup CommonBond is expected to bring a roughly US$100m inaugural deal to market soon, likely ahead of DRB, a person with knowledge of the situation said.

Unlike SoFi or CommonBond, though, DRB has certain advantages as a community bank, namely that its cost of funds is nominal.

“We are funded by deposits,” Aranoff said. “We are the lender. There is no matchmaker with us.”

By Joy Wiltermuth

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