SoFi Earns Double-A for $530M Personal Loan ABS

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Social Finance’s new $530 million consumer loan securitization, it’s third of the year, is the first to earn a double-A, from both Kroll Bond Rating Agency and S&P Global Ratings.

Both credit rating agencies assigned a preliminary double-A to $470 million in Class A notes, a notch higher than the single-A for the comparable trances of two prior 2017 securitizations of personal loans to its prime consumer borrower base.

The senior notes benefit from 22.97% credit enhancementand are backed by pool of online marketplace loans with an average balance of $34,899.

SoFi Consumer Loan 2017-3 will also issue a $60 million tranche of Class B notes to be rated A by S&P alonge; Kroll chose not to rate the subordainte tranche.

SoFi, a California lender best known as a student-loan refinancing lender, has now issued nine rated term asset-backed securitizations of unsecured consumer loans since launching the business line in 2014.

The loans in SCLP 201703 range from $5,000 to $100,000 on three-, five- and seven-year terms. Over 51% of the loans are seven-year terms, to borrowers with a weighted average income of $141,780, credit scores of 733 and free monthly cash flow of $5,201.

SoFi has originated a total of $5.4 billion in personal loans to 153,000 prime-quality borrowers, and as of March 31 had $1.78 billion of multi-year funding capacity from five banks to finance its personal loan originations.

Kroll normally caps marketplace lenders at A ratings because of limited data on asset performance, thin capitalization and the regulatory risk over interstate "true lender" case law and the involvement of third-party funding models. SoFi's last two deals had A-rated senior notes (the SoFi loan trust's fifth securitization of 2016 had a higher A+ rating).

But despite reports of increasing loan losses on one of SoFi's 2015 ABS transactions, Kroll felt comfortable assigning a AA to the atest deal due to its strong equity, high-quality professional borrower base and its diversity of lending products in student loans as well as mortgages.

SoFi’s two previous deals this year have totaled $1.04 billion.

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