Theorem Closes its Sixth ABS Transaction
Theorem Technology, Inc., a leading asset manager and technology company dedicated to the pursuit of truth in credit by providing institutional-grade underwriting to the consumer debt markets, announced on April 26, 2023, that it closed its sixth securitization backed by high-quality consumer loans acquired from a diversified mix of marketplace lending platforms including LendingClub, Marlette, Upgrade and Prosper. The $235 million transaction is the first 144A issuance of the year for Theorem and follows three transactions in 2022 totaling over $1B in issuance, one in 2021 for $500 million and one in 2020 for $255 million, bringing the total issued under Theorem's securitization program to over $2 billion. THRM 2023-1 issued two classes of notes rated A- and BBB-, respectively, by Kroll Bond Rating Agency, LLC. Goldman Sachs acted as lead bookrunner and structuring agent, with ATLAS SP Partners as joint bookrunner.
The transaction was well-received by both existing and first-time investors to the program. The Class As were oersubscribed and realized a 25bps spread tightening to guidance range, and a 50bps spread tightening compared to the prior THRM transaction, which closed in November 2022. The collateral mix included more prime borrowers than the mix in recent issuances, due to several iterations of model adjustments and significant credit box tightening that took place over the past several quarters. With this transaction closing, Theorem is now included on the DV01 unsecured consumer market index.
Hugh Edmundson, Theorem's Chairman and CIO, noted that "together with our recent private placements, the THRM 2023-1 represents the continued evolution of Theorem's securitization program to achieve fixed-rate financings of high-quality collateral from more platforms in Theorem's ecosystem."
Consistent with prior THRM transactions, Theorem retained all of the equity in the deal. Brian Beck, Theorem's General Counsel and CCO, stated that "Theorem's credit evaluation capabilities aren't limited to purchasing at origination. We're actively bidding on secondary whole loan pools of unsecured consumer assets as well and as our experience with different platforms deepens, our appetite is growing there as well." In the past year, Theorem added six new platform partners (eight total new programs) and expanded into two new asset classes (auto and solar loans), with more expected to come into this year. Theorem currently purchases loans from 15 different originators across unsecured consumer, auto, home improvement, solar and cards.
Founded in 2014, Theorem is a San Mateo-based technology company bridging consumer credit to institutional capital. Theorem combines machine-learning technology and deeply integrated partnerships to score US consumer credit. Since its founding, Theorem has acquired over $9 billion of consumer loans on behalf of its clients and manages over $2.2 billion in net assets.
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