The MoneyMe Ltd (ASX: MME) share price is surging into the green on Friday.
At the time of writing, shares in the provider of retail consumer finance are tracking 28% higher at 73 cents apiece.
MoneyMe shares are catching bids today following a company announcement regarding its funding platform.
What did MoneyMe announce?
The MoneyMe share price is soaring after the company advised it completed its inaugural term securitisation of personal loan customer receivables on 30 June. This has concurrently increased its undrawn securitisation funding capacity.
Securitisation is a process of collecting receivables (mortgages, auto loans, credit card receivables etc) into a large pool, and then packaging these into an investment product to be sold to investors.
Investors then receive the cash flows from these loans as a distribution, while lenders are happy to remove the liability off the balance sheet. As an asset class, they are called asset-backed securities, or mortgage-backed securities.
The MoneyMe transaction was made up of a $200 million term securitisation and a private placement with three Australian investors. It earned a triple-A rating for its senior tranche from Moody’s ratings.
The securitised loans also free up $200 million of funding capacity in MoneyMe’s warehouses, it says.
As a result, MoneyMe increased external securitisation funding facilities to $1.65 billion, while undrawn capacity increased to $388 million.
The transactions have also helped to reduce the group’s securitisation cost of “funds drawn margin to circa 3.1%”.
Speaking on the update fuelling the MoneyMe share price today, CEO Clayton Howes said he was pleased to see the “consistent step changes being made in [the company’s] securitisation funding program”.
Our inaugural term securitisation is incredibly exciting, with Moody’s Aaa (sf) rating a testament to our track record of consistent credit performance and underwriting standards.
We remain focussed on executing our strategy: profitable growth, innovation, maintaining the quality of our loan book, and efficiency and accuracy in credit decisioning thanks to our proprietary lending technology platform.
In the last 12 months, the MoneyMe share price has collapsed by around 68%.