The ratings agencies are wondering how to apply their business models to the growing world of P2P loans.
From Standard & Poor’s this week:
Standard & Poor’s believes the novelty of this sector and its wide range of players presents unique challenges in assessing the overall risks in future P2P loan securitizations. We monitor developments in this nascent sector from a cross-sector vantage point and draw upon our experience in rating various types of consumer, commercial, and structured debt.
P2P lending is evolving, and it’s still too early to know what the industry will look like in its more mature state. As with any young and untested market, we believe there are issues that need to be addressed before we can assign ratings. Some of these issues are P2P companies’ lack of performance histories through full economic cycles, uncertainty about their long-term commitment to the business, and their financial stability, operational risks, servicing quality, and loan credit performance in a downturn. We also consider the unproven ability and capacity to comply with new and ongoing regulatory and legislative requirements.