Credit spreads on asset-backed securities backed by peer-to-peer loans issued in Northern Hemisphere markets have moved sharply wider and liquidity in the sector has dried up.There is no P2P securitisation in Australia or New Zealand, where most marketplace lenders have sourced their funding to institutional and  sophisticated investors to date.They are already benefitting from a reallocation of capital toward a promising domestic market, capital previously managed by Lending Club now earmarked for Australia.One P2P lender may share news with this theme soon.A recent misadventure at P2P icon Lending Club saw its chief executive Renaud Laplanche obliged to leave, fostering an accelerated rethink on a fashionable sector, freeing up capitalLendingClub listed on the New York Stock Exchange in December 2014 and at one point its market capitalisation exceeded US$29 billion. Its market value has since plunged to around US$1 billion.LendingClub's business model gradually changed as it became increasingly difficult to source individual lenders under the original P2P model in sufficient volume.Loans are now sold to hedge funds and securitised for institutional investors. In the process, a US$22 million package of loans was sold to a hedge fund that didn't meet the fund's requirements.The sale fell through, questions were asked, and the CEO was asked to leave.While LendingClub has turned into a disaster for shareholders, it has also had ramifications in the nascent market for securitised P2P loans.Troubles in the P2P ABS market have been evident since mid-2015, when credit spreads reached a low point, according to market data provider Markit.Whether this is necessarily true is debatable, as all credit spreads have moved wider since mid-2015.Nevertheless, Markit reports that the average spread on senior P2P loan ABS has widened 76 per cent since last October, and spiked at 269 basis points when LendingClub's troubles emerged. The Markit Liquidity score for P2P ABS has deteriorated to 2.69 from 1.50 last December.    According to Markit, P2P backed securities first appeared in 2014 and the buoyant sector saw spreads tighten from over 200 bps in February 2015 rally to 153 bps by the northern summer. But growing concerns over the credit quality of the sector pushed credit spreads beyond 300 bps in the first quarter of this year.The P2P industry may now attract closer regulatory scrutiny. This may ultimately affect P2P lenders' ability to access securitisation markets in the future.