The securitization received high ratings from three ratings agencies. Moody’s, Standard & Poor’s and DBRS gave the highest rated senior notes Aa2/A/AA (high) respectively. This is the largest securitization to date for a marketplace lender and it is the only securitization to receive such a high rating.
This is SoFi’s fifth securitization; the first one was completed in 2013. In 2014 SoFi became the first marketplace lender to secure investment grade ratings from S&P and Moody’s for senior notes in a securitization.
The transaction was comprised of $146.676m of floating rate A-1 notes, $235.445m of fixed rate A-2 notes, and $29.78m of Class B bonds. It was backed by $441m in collateral. Goldman Sachs and Morgan Stanley led the transaction.
Nino Fanlo, SoFi CFO and COO, commented:
“Creating a capital efficient market helps us fuel a virtuous cycle, which in turn supports our goal of providing the best products and borrowing climate for our members. Securing the highest ratings for a marketplace lender is further proof of the stability and appeal of our platform and the category overall. As we complete our fifth securitization, it's gratifying to be continually broadening our universe of investors and spreading SoFi's brand to more companies, investors and individuals.”
Yesterday CommonBond announced its inaugural securitization of graduate student loans. The company is securitizing about $100 million of student loan assets. It is expected that the securities will be rated Baa2 by Moody’s and A (high) by DBRS. The securitization trend will bring a wider variety of investors to the space. It is worth noting that many of the securitizations we are seeing are made of student loans. One of the oft quoted problems by P2P doubters is how flighty the capital, both retail and institutional, invested through the platforms will be. By giving investors another asset option securitization will give current investors a way to diversify their P2P portfolios and will bring demand from new investors who want to buy the securities.