SoFi Returns with Third Consumer Loan Securitization of 2016
SoFi Lending is marketing another $427 million of bonds backed by unsecured consumer loans, according to rating agency reports.
The deal, SoFi Consumer Loan Program 2016-1, will issue to tranches, $377 million of senior notes with a preliminary single-A rating from DBRS and Kroll Bond Rating Agency a $50.8 million subordinate tranche rated triple-B.
There will also be an unrated tranche of notes.
SoFi, got its start making refinanced student loans in 2012, targeting borrowers with professional degrees and high paying jobs. In 2014, the company began to originate mortgage loans, and in 2015, it expanded to consumer loans.
Borrower profiles are slightly different for the consumer loan portfolio than the student loan refinancing portfolio, according to DBRS. Compared with the most recent student loan refinancing transaction issued by SoFi in 2016, consumer loan obligors in this transaction are slightly older (35 to 50 compared with, in general terms, the student loan refinancing ages of 25 to 40) with slightly lower income ($142,616 versus $178,111) and credit scores.
DBRS assumes that the weighted average default and net loss rate on the collateral pool will be 10.32% and 9.80%, respectively.
Initial credit enhancement for the notes is 15.07%, which consists of 14.57% overcollateralization and 0.50% non-declining reserve account. Overcollateralization will build from 14.57% of the initial collateral balance building to a target of 22.00% of the current collateral balance, subject to a floor of 1% of original collateral balance.