Sofi has announced the securitisation of $417.6 million in refinanced student loans. This is both the biggest securitisation announced by a platform to date and the most highly rated as $387.5 million - 93% - has received a AAA rating from DBRS and Aa2 from Moody's. This is believed to be the first awarding of such grades to a marketplace industry securitisation. This is the sixth securitisation of refinanced student loans – taking the total up to $1.85 billion - and follows Sofi's June securitisation - also a record breaking event. That time, SoFi closed a $412 million securitisation with the most senior notes receiving the same Aa2 rating from Moody's and a AA rating from Standard & Poor. That was, at the time, the largest securitisation and the highest rating given to a marketplace lender.
These recent achievements are indicative of SoFi's impressive progress: the company now claims to be the largest provider of student refinancing, with over $3 billion funded and were recently recognized in CNBC's Disruptor 50 - which lists the 50 firms who are providing the most disruption to traditional industry. SoFi celebrates its proprietary underwriting approach which takes into account merit and employment history in determining the terms of its financing.
Nino Fanlo - SoFi CFO/COO - commented:
"Last year we were the first marketplace lender to secure investment grade ratings from the leading agencies, and now we're the first fintech company to receive a Triple A rating from DBRS. It's gratifying to see our investor base deepen, including twenty of the world's leading and most highly regarded institutional investors. These ratings are further proof that we're creating capital efficiency that strengthens the value of our products for our members".
Moving forward, SoFi intend to broaden its asset classes, including Personal loans and mortgages where their loan volumes continue to grow.
“We believe we've led about two thirds of the total securitizations in the marketplace industry. Looking ahead, we look forward to strengthening our leadership position and broadening the appeal of these transactions even further".
Whilst SoFi's securitizations are market leading - they are not alone in the space: in June CommonBond announced the securitization of $100M of student loans, rated Baa2 by Moody's and A (high) by DBRS - two notches above the non-investment grade line of Ba1.
Another securitization, another record broken: this explosion in growth clearly paints a picture of strong growth in the industry, and indicates a rising level of institutional demand for the asset. There are significant risks to investing in this way - as a recent report from Moody's pointed out. However, in America at least, this appears to be failing to deter investors and continuing to fuel the AltFi space.