Prodigy Finance issues $228m of investment-grade asset-backed securities

The transaction has brought a number of major public market investors and asset managers to the lender for the first time.

Prodigy Finance, a UK fintech lender for international post-graduate education, has entered the fixed-income market with the issuance of a $288m investment-grade Student Loan Asset-Backed Securitisation backed by its loan portfolio.

The firm lends money to international students to help with their studies by modelinng their future potential and has originated over $1bn since launching nearly five years ago.

It's move into securitisation reflects a broader trend for alternative lenders, seeing increasingly large capital channels through asset managers.

The ABS is backed by a portfolio of $304m of loans Prodigy Finance has lent to postgraduate students since 2017. 

The issuance, which the firm says was heavily oversubscribed, received investment credit ratings of Aa3 by Moody’s Investor Services, and A+ by Kroll for its senior tranche of $227m notes. It was priced at LIBOR +125bp from the day of launch

It was also made under Prodigy Finance’s ethical guidelines which it says is aligned with UN Sustainable Development Goals

Prodigy Finance says it saw a 50 per cent year-on-year increase in loan applications in the past 12 months and despite disruption caused by the global pandemic, demand is increasing once again.

Cameron Stevens, CEO of Prodigy Finance, said: “Our borrowers are typically underserved by traditional lenders who require collateral, a co-signer or a credit history in the country of study. Prodigy Finance’s ability to originate loans based on a borrower’s future earnings potential allows for these students to have access to financing and ultimately access education at the highest ranked schools in the world.”

Last year, Prodigy Finance secured a $250m facility with America’s development bank, the U.S. International Development Finance Corporation (DFC).