SoFi aims to raise $440m in consumer lending ABS

A pool of unsecured consumer loans will underwrite a planned issuance of $440 million of asset-backed notes from the SoFi 2022-1S consumer loan program.

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 weather potential credit issues, such as as the low credit profile of SoFi Lending Cop., the sponsor and servicing agent, and its short history of securitization.

For starters, ratings agency Kroll Bond noted that the deal, known as SCLP 2022-1S, contains only seasoned guarantees, generally originating in 2018-2021. It also gives the deal a lower current loan balance, $20.988, compared to $32.006 billion in SCLP 2021-1.

The 28,567 loans in the pool have a weighted average original term of 61 months, with 27 months to mature, according to a pre-sale report from Moody’s Investors Service.

“A highly experienced pool includes loans that have demonstrated strong payment behaviors. We view this seasoning as credit positive,” the Moody’s report said, adding that “the borrower profile is one of the strongest among the consumer loan ABS that we assess”.

To offset some of the deal’s credit weaknesses, such as low sponsor and repairer credit profiles, Systems & Services Technologies will step in as a standby repairer, the ratings agencies said.

Cantor Fitzgerald is part of a group of banks acting as initial buyers, which includes BofA Securities, Goldman Sachs & Co., JP Morgan Securities and US Bancorp Investments, according to Moody’s. The Trust will repay the Notes using a turbo structure, where the Trust will use available funds to pay the principal of 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 only one class of notes, the rating agency said.

With respect to the credit enhancement, the Notes will benefit from a 26.61% overcollateralisation, non-declining balance cash reserve account, funded at closing, equal to 0.50% of the original balance of the Notes. The notes will also benefit from a gross excess spread, before losses, of 4.09%, KBRA said.

KBRA plans to assign “AAA” ratings to the ratings, while

Moody’s plans to rate “Aaa” ratings. The bonds have a final legal maturity date of April 15, 2031.