Pagaya Closes New $400 Million Consumer Loan Deal, Reflecting Continued Strong Investor Demand

Rhea-AI Summary

Pagaya Technologies LTD. (NASDAQ: PGY) announced the closing of PAID 2024-1, its 48th asset-backed securitization (ABS), raising $396 million of notes backed by personal loans. The company has raised over $20 billion in ABS transactions since 2018 and remains the number one personal loan ABS issuer by issuance size in the U.S. The transaction reflects strong investment demand coming into 2024, with 40 unique investors participating, the majority of whom were repeat investors. Pagaya's Chief Capital Officer, Paul Limanni, expressed confidence in the company's track record of success and the meaningful reduction in average spread across the capital structure.

Insights

Financial Analyst

The closing of Pagaya Technologies LTD.'s 48th asset-backed securitization (ABS), PAID 2024-1, marks a significant event in the securitization market, particularly as it represents the first of its kind in 2024. The successful raise of $396 million, backed by personal loans, indicates a strong investor confidence in Pagaya's AI-driven approach to financial services. The securitization process allows Pagaya to liquidate assets that would otherwise be illiquid, turning them into a tradable form that appeals to a broader range of institutional investors.

Investor demand is evidenced by the participation of 40 unique investors, with 25% being new to Pagaya's offerings. This diversification of the investor base is indicative of the market's appetite for innovative and AI-powered financial products. The reduction in average spread across the capital structure also suggests that investors are willing to accept lower returns for Pagaya's ABS, which could be a reflection of the perceived quality and lower risk associated with these securities.

Market Research Analyst

Pagaya's position as the number one personal loan ABS issuer in the U.S. by issuance size is a testament to the company's market dominance and the scalability of its AI-driven platform. The continued robust demand for Pagaya's securitized products highlights a trend within the financial ecosystem towards automation and data-driven decision-making. The inclusion of 25% new investors in the latest transaction may signal a growing interest in alternative investment opportunities that leverage advanced technologies like AI.

From a market perspective, Pagaya's ongoing success in ABS transactions may encourage other firms to adopt similar technology-driven strategies for their financial products. The company's ability to consistently meet the needs of prominent financial institutions and deliver efficient, market-fit structures could set a benchmark for the industry, potentially influencing the direction of financial innovation and investment strategies.

Economist

The securitization market is a critical component of the broader financial system, providing liquidity and enabling risk-sharing. Pagaya's recent ABS issuance is an important indicator of the health of the credit markets, as it reflects the willingness of institutional investors to allocate capital to consumer loan products. The transaction also has implications for the overall economy, as it facilitates consumer access to credit by enabling lending partners to offload risk and replenish their capital, thereby potentially stimulating economic activity.

Moreover, the presence of repeat investors in Pagaya's transactions suggests a stable demand for ABS products, which can be a positive sign for the credit markets. However, it is essential to monitor the quality of the underlying personal loans, as an increase in ABS issuance can also lead to concerns about lending standards and credit risk if not managed properly.

• First Asset Backed Securitization of 2024 after raising $6.6 billion in 2023
• Pagaya remains the #1 ABS issuer of personal loans in the U.S.

NEW YORK--(BUSINESS WIRE)-- Pagaya Technologies LTD. (NASDAQ: PGY) ("Pagaya" or “the Company”), a global technology company delivering AI-driven product solutions for the financial ecosystem, today announced the closing of PAID 2024-1, its 48th asset-backed securitization (ABS), which was rated by Kroll Bond Rating Agency.

Qualified institutional buyers purchased $396 million of notes backed by personal loans that will be originated by lending partners on Pagaya’s AI-powered network. Pagaya’s efficient, scalable and innovative platform continues to see robust investor demand, underscoring the Company’s ability to meet the needs of prominent financial institutions and deliver efficient, fit-for-market structures across the financial ecosystem. A total of 40 unique investors participated in this latest transaction, the majority of whom were repeat investors, and 25% of whom were new investors who had not previously participated in the Company’s deals - reflecting strong investment demand coming into 2024.

Pagaya has raised over $20 billion in ABS transactions since 2018 across multiple products. Pagaya remains the number one personal loan ABS issuer by issuance size in the U.S., solidifying its reputation as the benchmark issuer of this product.

“This new ABS transaction continues our 2023 track record of success into the new year,” said Paul Limanni, Pagaya’s Chief Capital Officer. “With the first ABS deal of 2024, we continue to see deep demand from many returning and new investors participating in this transaction and a meaningful reduction in average spread across the capital structure.”

About Pagaya Technologies

Pagaya (NASDAQ: PGY) is a global technology company making life-changing financial products and services available to more people nationwide, as it reshapes the financial services ecosystem. By using machine learning, a vast data network and a sophisticated AI-driven approach, Pagaya provides comprehensive consumer credit and residential real estate products for its partners, their customers, and investors. Its proprietary API and capital solutions integrate into its network of partners to deliver seamless user experiences and greater access to the mainstream economy. Pagaya has offices in New York and Tel Aviv. For more information, visit pagaya.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240125432905/en/

Investors & Analysts

ir@pagaya.com

Media & Press

press@pagaya.com

Source: Pagaya Technologies LTD.

FAQ

What is the ticker symbol for Pagaya Technologies LTD.?

The ticker symbol for Pagaya Technologies LTD. is PGY.

How much money was raised in the PAID 2024-1 ABS transaction?

The PAID 2024-1 ABS transaction raised $396 million in notes backed by personal loans.

How many ABS transactions has Pagaya Technologies LTD. raised since 2018?

Pagaya Technologies LTD. has raised over $20 billion in ABS transactions since 2018.

What is the position of Pagaya Technologies LTD. as a personal loan ABS issuer in the U.S.?

Pagaya Technologies LTD. remains the number one personal loan ABS issuer by issuance size in the U.S.

Who expressed confidence in Pagaya's track record of success and the reduction in average spread across the capital structure?

Pagaya's Chief Capital Officer, Paul Limanni, expressed confidence in the company's track record of success and the reduction in average spread across the capital structure.