NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by SoFi Consumer Loan Program 2016-2 LLC (“SCLP 2016-2”). This is a $480.55 million consumer loan ABS transaction that is expected to close on August 1, 2016.
This transaction represents SoFi Lending Corp. (“SoFi” or the “Company”) second rated securitization collateralized by a portfolio of unsecured consumer loans. SoFi currently originates personal loans through its 21 state licenses or complies with certain requirements where a state lending license is not required. There was one prior unrated securitization, in which SoFi or SoFi’s institutional investors were the sponsors and the collateral was unsecured consumer loans.
Founded in 2011, SoFi is located in San Francisco, California and operates an online lending platform. Personal installment loans are offered to prime consumers through SoFi’s platform. Typical borrowers with loans securitized in this collateral pool, have an average annual income of approximately $138,606 average credit score of 738, monthly free cash flow of $5,031. Loans typically have an original term between 36 – 84 months, an original balance ranging in size from $5,000 to $100,000 with fixed rates or variable rates depending on the borrower’s risk profile and loan term. Borrowers are not charged an origination fee or any prepayment penalties on the loans. As of June 30, 2016, SoFi had originated approximately $2.6 billion in personal loans to roughly 68,000 different prime quality borrowers.
SoFi finances loans on its balance sheet through its $950 million multi-year warehouse capacity, through whole loan sales and retains a 5% residual interest in the securitizations by owning a portion of the Certificates.
Initial credit enhancement levels are 26.50% for the Class A Notes and 17.00% for the Class B Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A Notes), excess spread and a reserve account funded at closing.
KBRA applied its General Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and SoFi’s historical gross loss data. KBRA also conducted an operational assessment of the SoFi’s Platform, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
Preliminary Ratings Assigned: SoFi Consumer Loans Program 2016-2
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