Latest news with #assetbackedsecurities
Globe and Mail
7 hours ago
- Business
- Globe and Mail
PGY's Asset-Light Balance Sheet Model: Does it Offer a Safe Bet?
Pagaya Technologies Ltd. PGY, a leading fintech innovator, operates a capital-efficient model that largely avoids holding loans on its balance sheet, significantly reducing its exposure to credit risk and market volatility. This is made possible through a robust network of institutional funding partners and a strategic focus on issuing asset-backed securities (ABS). The capital raised in advance is held in trust and deployed only when a lending partner originates a loan through Pagaya's artificial intelligence (AI)-driven network. At that point, the loan is immediately acquired by a pre-committed funding source, either through an ABS vehicle or a forward flow agreement. As a result, most loans never reside on Pagaya's balance sheet or only do so briefly before being transferred. This off-balance-sheet model has proven particularly effective during periods of elevated interest rates and market stress. A lean balance sheet model helps Pagaya minimize its credit exposure and avoid significant loan write-downs. This way, the company manages to preserve its financial flexibility in turbulent environments. The leading fintech innovator appears to rely heavily on forward flow agreements. These contracts provide a reliable and predictable source of capital, helping Pagaya maintain liquidity even amid tightening credit markets and rising inflation. Since PGY's funding strategy is highly capital-efficient, it enables the firm to scale while minimizing equity dilution and limiting balance sheet risk. As of March 31, 2025, Pagaya reported $206.5 million in cash and short-term investments, alongside $507.8 million in debt, positioning it well for continued growth. Business Model of Pagaya's Peers Like PGY, Upstart Holdings, Inc. UPST is an AI-based lending platform that aspires to become capital-light but often holds loans on its balance sheet temporarily. Its core business model involves finding financing for loans after its network of bank and institutional partners originates them. Upstart partner banks can finance the loan by keeping it on their balance sheet. The bank can sell the whole loan on Upstart's platform or use forward flow agreements from institutions that commit to buying a specific volume or type of loan originated on the Upstart platform in the future. Upstart also uses securitization, wherein pools of loans are bundled together and sold as ABS to institutional investors. However, the firm frequently reverts to a balance-sheet-heavy model, especially in tight liquidity markets, making it more volatile and exposed to macro cycles. Another close competitor of PGY is LendingTree TREE. But unlike PGY, TREE is a marketplace platform, not a lender. It matches consumers with financial product providers like mortgages, personal loans, credit cards and insurance. LendingTree does not underwrite, originate, or hold loans, and hence, its balance sheet is not credit-heavy. TREE's balance sheet is detached from revenue generation. The company is primarily structured to support a fee-based digital marketplace, not balance sheet lending. PGY's Price Performance, Valuation & Estimate Analysis Investors are bullish on the PGY stock, which has skyrocketed 213% so far this year. The company has fared better than its competitors, LendingTree and Upstart. So far this year, shares of LendingTree have gained 22.4%, whereas Upstart has climbed 30.6%. YTD Price Performance Pagaya stock is currently trading at a 12-month forward price-to-sales (P/S) of 1.57X, which is significantly below the industry 's 3.41X. This shows that the PGY stock is trading at a discount compared with peers. Price to Sales Over the past two months, the Zacks Consensus Estimate for PGY's earnings for 2025 and 2026 has moved higher to $2.51 and $3.18, respectively. The consensus estimate indicates 202.4% and 26.7% year-over-year growth for 2025 and 2026, respectively. PGY Earnings Estimates Currently, Pagaya sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. #1 Semiconductor Stock to Buy (Not NVDA) The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow. One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LendingTree, Inc. (TREE): Free Stock Analysis Report Upstart Holdings, Inc. (UPST): Free Stock Analysis Report
Bloomberg
14-07-2025
- Business
- Bloomberg
Sandwich Chain Jersey Mike's to Raise $400 Million in Asset Backed Securities
Jersey Mike's is planning to sell $400 million of asset backed securities to potentially help pay out money to Blackstone Inc., the private equity firm that bought a majority stake in the sandwich restaurant chain earlier this year. The company is selling a type of debt known as a whole business securitization bonds, which are backed by Jersey Mike's assets including fees from franchises and US trademarks. The securities are set to be rated BBB by S&P Global Ratings and Kroll Bond Rating Agency, according to person with knowledge of the transaction.
Bloomberg
08-07-2025
- Business
- Bloomberg
Altice USA Subsidiary Lightpath Seeks to Sell Fiber Network ABS
Cablevision Lightpath LLC, a fiber optic communications services provider that is majority controlled by Altice USA Inc., is looking to sell as much as $2.8 billion of asset-backed securities. The securities would be backed by fiber networks, including conduit and fiber optic cables as well as customer agreements, according to a filing before the New York Public Service Commission dated July 3. The company has $7.2 billion of debt coming due in 2027, and $5.4 billion a year later.
Yahoo
19-06-2025
- Business
- Yahoo
PGY Expects Double-Digit Top-Line Growth in 2025: What's Driving It?
Pagaya Technologies Ltd. PGY, a leading fintech innovator, raised its 2025 revenue outlook after a strong Q1 performance (revenues and other income jumped 18%). The company now expects total revenues and other income between $1.175 billion and $1.3 billion, up from its earlier $1.15–$1.275 billion estimation. This compares with $1.032 billion reported in 2024. The Zacks Consensus Estimate for 2025 and 2026 revenues of $1.23 billion and $1.42 billion implies growth of 19.9% and 15.7%, respectively. PGY Sales Estimates Image Source: Zacks Investment Research Further, the company anticipates second-quarter total revenues and other income to be in the range of $290-$310 million. The company's growth strategy focuses on expanding products to boost partner customer value, enhancing monetization of existing partnerships and adding new enterprise lending partners, especially large U.S. banks and auto core strength lies in its resilient and adaptable business model. The company is expanding beyond its original focus on personal loans, moving into auto lending and point-of-sale (POS) financing. This reduces exposure to cyclical risk in any single loan category, making the business more stable across economic Pagaya is diversifying its funding sources. It has built a robust network of more than 135 institutional funding partners to support the sale of its asset-backed securities (ABS). The company utilizes forward flow agreements to secure a predictable and stable capital source, helping mitigate liquidity risks, especially during periods of rising inflation and interest competitive edge lies in its proprietary data and product suite, including its Pre-screen solution. This tool allows lenders to offer pre-approved loans to existing customers without formal applications, helping deepen relationships and expand credit access with minimal marketing cost. Unlike PGY, LendingTree TREE lowered its 2025 total revenue outlook. The company now expects the metric to be between $955 million and $995 million compared with the prior target of $0.985-$1.03 billion. Further, the company projects adjusted EBITDA to be $116-$124 for the second quarter, LendingTree anticipates total revenues in the range of $241-$248 million and adjusted EBITDA between $29 million and $31 LC has guided for the second quarter of 2025. The company expects pre-provision net revenues to be in the $70-$80 million range. Additionally, LendingClub projects loan originations between $2.1 billion and $2.3 billion for the quarter. Investors are bullish on PGY stock, which has surged 102.9% this year. The company has fared better than its close competitors, LendingTree and LendingClub. So far this year, shares of LendingTree have declined 10.7%, while LendingClub has tumbled 30.7%. YTD Price Performance Image Source: Zacks Investment Research Pagaya stock is currently trading at a 12-month trailing price-to-book (P/B) of 3.23X, which is below the industry's 3.47X. This shows the stock is trading at a discount. Price-to-Book Image Source: Zacks Investment Research Over the past two months, the Zacks Consensus Estimate for earnings for 2025 and 2026 has moved higher to $2.45 and $3.13, respectively. The consensus estimate for earnings indicates 195.2% and 28% growth for 2025 and 2026, respectively. PGY Earnings Estimates Image Source: Zacks Investment Research Management projects net income (GAAP) to be in the range of $10-$45 million for currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LendingTree, Inc. (TREE) : Free Stock Analysis Report LendingClub Corporation (LC) : Free Stock Analysis Report Pagaya Technologies Ltd. (PGY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Bloomberg
04-06-2025
- Business
- Bloomberg
EU Eyes Capital Relief for Insurers to Spur Asset-Backed Market
The European Commission is considering reducing the capital that insurers must hold against investments in asset-backed securities, part of a broader effort to revive a €1.2 trillion ($1.4 trillion) market that can finance areas like housing, energy, and defense. The reduction would be as much as 40% in some cases, according to a document being discussed with a panel of experts, with the size of the cut depending on the credit rating and whether the transaction complies with a framework for securitizations.
