Prosper is lowering rates for higher credit quality borrowers and increasing rates in the lower credit quality segments; borrowers with loan ratings AA through C will see a rate decrease of as much as 79 basis points while borrower ratings D through HR could see an increase of as much as 74 basis points; in total, across all ratings, rates will be lower by approximately 39 basis points; Prosper says the rate changes are a result of the credit market environment, interest rate expectations and competition for consumer loans. Source
Prosper filed its annual earnings report with the Securities and Exchange Commission showing an annual loss in 2016 of $118.7 million from revenue of $132.9 million; the loss compares to an annual loss of $26 million for 2015; 2016 was a challenging year for the industry overall; Prosper attributes the losses to lower loan volumes and higher restructuring and legal costs; in February, Prosper reported a $5 billion deal with a consortium of investors committing to invest in Prosper's loans over the next two years, which has helped to give the firm a much more positive outlook for 2017. Source
Global Debt Registry (GDR) has been steadily growing its business now announcing that Prosper will join the firm's verification network; by partnering with GDR, Prosper can enhance the reporting for its institutional investors; according to John Goldston, director of capital markets at Prosper, "GDR's eValidation and eVerify asset certainty tools fit easily into our existing data structures and processes, allowing our investors to seamlessly access GDR's enhanced verification and loan-level diligence services." Source
In a letter to investors, Prosper has announced they are releasing their seventh generation credit model (PMI7) around December 20, 2016; Prosper also announced they are changing their credit bureau from Experian to TransUnion; according to Prosper, "Using TransUnion will allow us to leverage trended historical data on borrowers and make better underwriting decisions within the new credit model."; Prosper's rating system on loans from AA-HR will remain the same.
In January, Prosper began using its new PMI7 credit underwriting model; Prosper expects PMI7 to help improve returns and credit scoring metrics; the estimated return on loans issued for January is 7.86%; post-charge off recoveries have been higher than estimated which is expected to increase IRR calculations; delinquencies and pre-payments are also improving; the average coupon increased 300 bps in January to 15.99% as PMI7 caused an increase in higher risk loans. Source
Prosper is in talks with Chinese conglomerate Linca to sell an approximately 10% stake in the company; according to the source, Linca would invest $50 million in Prosper at a valuation of about $550 million, reducing Prosper's value from approximately $2 billion reported in 2015; plans for its recent $5 billion investment in loans on the platform from a consortium of investors continues and this new deal is reportedly expected to help provide capital for future investments. Source
Prosper tightened its credit underwriting in July resulting in a shift toward lower risk loans; the changes caused a total portfolio coupon decrease of 45 basis points and a return estimate decrease of 26 basis points; reported lower charge-off levels from 2016H2 loans and higher delinquencies from loans issued in 2016 and 2017; C-rated loans accounted for the greatest portion of the total portfolio at 31.54%; estimated weighted average return for the month was 7.75%. Source
Estimated return for December 2016 production is 6.45%; PMI7, Prosper's underwriting model, was put in place late December, 2016; models are updated every 12 to 18 months; average FICO was higher than lows in 2015 and 2016 but is expected to decrease with an increase in lower grade loans as a result of the new credit risk model; prepayment rates increased and delinquency rates were lower; cumulative gross charge offs have increased but are expected to trend lower. Source
Estimated return on loan production in November 2016 was 6.58%, which is down from the previous three months; Prosper attributes its revised pricing and credit market trends overall to the month's weaker performance; the average FICO score in November was 714.2 which is approximately 10 points above the FICO scores in 2015 vintages; cumulative charge-offs are trending higher in 2015 and 2016 than 2013 and 2014; higher pricing is also a factor potentially affecting prepayment rates which are higher for loans originated in 2016. Source
Prosper released its October 2016 performance report with the month's estimated return of 7.12% just below the estimate of 7.17% for the third quarter; in October, vintage prepayment rates continued to trend higher; delinquencies and loss patterns since 2013 are below levels in 2012; cumulative gross charge-offs appear to be a factor trending higher; average FICO of the portfolio was 714.1 in October. Source