Lower grade D credit notes have been suspended from Lending Club investing offerings. However, Lending Club investing remains a good alternative investment.
Lending Club announced it has suspended the issuance of new alternative investment grade D loans. The change, which will impact member investing, comes as a result of COVID-19 on the economy.
This decision follows Lending Club’s recent interest rate increase to borrowers in late March.
Even so, the online lender continues to encourage investing on the platform as the best way to support borrowing members in the current financial climate. As an incentive, Lending Club announced an investor bonus incentive for all new Note purchases made between June 1 and August 31.
What does this mean for Liquid P2P users?
Based on the current average of our users’ adjusted NAR, Lending Club investing remains a good alternative investment.
In 2019, Grade D loans accounted for 13.88% of originated loans. Although they may become more scarce, Grade D notes are still available through the secondary market (Folio). We’ll continue investing in notes that meet our automated investing algorithm where available.
What action should Liquid P2P users take?
You can log in to your Liquid P2P account to adjust you loan grade allocation. To avoid cash drag, you may want to have less weight in Grade D loans.
“On March 31, 2020, LendingClub Corporation (the “Company”) suspended the facilitation of new D grade member loans (the “Grade D Suspension”) due to the impact of COVID-19 on the economy, and accordingly no D grade member loans will be available after April 10, 2020. In connection with the Grade D Suspension, below are several amendments to the Company’s prospectus dated August 9, 2019 relating to the Notes.”
Read the full FWP from LendingClub investor relations: