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The MoneyMe Ltd (ASX: MME) the stock price is climbing into the green on Friday.
At the time of writing, shares of the retail consumer finance provider are up 28% to 73 cents apiece.
MoneyMe shares are being offered today following an announcement by the company regarding its funding platform.
What did MoneyMe announce?
MoneyMe’s stock price is soaring after the company announced it completed its first term securitization of personal loan trade receivables on June 30. This simultaneously increased its unused securitization funding capacity.
Securitization is a process of collecting receivables (mortgages, car loans, credit card receivables, etc.) into a large pool and then aggregating them into an investment product to sell to investors.
Investors then receive the cash flow from these loans as a distribution, while lenders are happy to remove the liability from the balance sheet. As an asset class, they are called asset-backed securities or mortgage-backed securities.
The MoneyMe transaction consisted of a $200 million term securitization and a private placement with three Australian investors. It has earned a triple-A rating for its senior tranche from Moody’s.
The securitized loans also free up $200 million of funding capacity in MoneyMe’s warehouses, it says.
As a result, MoneyMe increased external securitization funding facilities to $1.65 billion, while unused capacity increased to $388 million.
The transactions also reduced the group’s securitization cost from “the margin from the funds to around 3.1%”.
Speaking on the update fueling MoneyMe’s share price today, CEO Clayton Howes said he was pleased to see the “constant incremental changes being made in [the company’s] securitization financing program”.
Our inaugural term securitization is incredibly exciting, with Moody’s Aaa (sf) rating reflecting our track record of consistent credit performance and underwriting standards.
We remain focused on executing our strategy: profitable growth, innovation, maintaining the quality of our loan portfolio, and the efficiency and accuracy of credit decisions through our technology platform of exclusive loan.
Over the past 12 months, MoneyMe’s stock price has crashed about 68%.