A pool of unsecured consumer loans will secure a planned $440 million issuance of asset-backed notes from the SoFi Consumer Loan Program 2022-1S.
Observers expect the collateral's strong credit profile—a seasoned loan pool with a weighted average credit score of 753 and high monthly free cash flow—to overcome potential credit challenges, such as the weak credit profile of SoFi Lending Cop., the sponsor and servicer, and its short securitization history.
To begin with Kroll Bond Rating Agency, noted that the deal, known as SCLP 2022-1S, contains only seasoned collateral, generally originated from 2018-2021. This also gives the deal a lower current loan balance, $20,988, compared with $32,006b in the SCLP 2021-1
The 28,567 loans in the pool have a weighted average original term of 61 months, with 27 months of seasoning, according to a pre-sale report from Moody's Investors Service.
"A highly seasoned pool includes loans that have demonstrated strong payment behaviors. We viewed this seasoning as a credit positive," the Moody's report said, adding that "the borrower profile is one of the strongest among the consumer loan ABS we rate."
To compensate for some of the deal's credit weaknesses, such as the weak credit profiles of the sponsor and servicer, Systems & Services Technologies will step in as the backup servicer, the rating agencies said.
Cantor Fitzgerald is among a group of banks acting as initial purchasers, which includes BofA Securities, Goldman Sachs & Co., J.P. Morgan Securities and U.S. Bancorp Investments, according to Moody's. The trust will repay notes using a turbo structure, where the trust will use available funds to pay principal on the class A notes after senior transaction fees, interest payments on the notes and reserve account replenishment, the rating agency said.
The portfolio has a total securitized amount of $599.5 million, and the deal will issue just one class of notes, the rating agency said.
As for credit enhancement, the notes will benefit from overcollateralization of 26.61%, a non-declining cash reserve account, funded at closing, to equal 0.50% of the initial note balance. The notes will also benefit from gross excess spread, before losses, of 4.09%, KBRA said.
KBRA expects to assign 'AAA' ratings to the notes, while
Moody's says anticipates rating the notes 'Aaa.' The notes have a legal final maturity date of April 15, 2031.
