Today we’re pleased to announce that Upstart’s first loan securitization has closed. (Finance nerds, just look for “UPST 2017-1” on your Bloomberg terminal). We’re happy to achieve an investment-grade rating on our senior bonds and pricing that reflects confidence in our credit performance. We’re also pleased to welcome fifteen buyers with whom we hope to partner for years to come.
A Big Deal
Securitizations are nothing new, but this is the first time loans originated through a modern machine learning platform have been brought to market. Upstart goes beyond FICO, using hundreds of non-conventional variables at scale to provide superior loan performance and improve consumers’ access to credit. Bringing a new and disruptive model to a traditional credit market means we had to educate rating agencies, credit buyers, and regulators, and provide unparalleled transparency into our business. Read here if you want to learn more.
Why It Matters to Upstart
Securitization is an important step for Upstart because it provides financing and liquidity to all of our loan buyers. It also enables us to participate actively in the world’s credit markets. Like an IPO, a loan securitization requires long-term investment in business and process maturity for the issuer, so it’s a meaningful step on the journey from startup to enduring enterprise. Also, having a ticker on Bloomberg also provides visibility into a lender’s credit performance, so it’s the ultimate road test for a lending platform.
We anticipate participating in securitization markets for years to come – what’s referred to as a “programmatic issuer.” At the same time, we plan to continually improve our credit model and lending process to drive responsible and economically viable growth in originations. Already the rapid growth in our loan volumes and unit economics is providing a clear path to a sustainable, profitable lending platform for many years to come.