SoFi completes largest loan securitization, cancels banking plans

By Daniel Lanyon on Monday 16 October 2017

Alternative LendingDigital Banking

The San Fransisco based alternative lending platform is, despite a scandal, on a tear but won't become a bank.

The San Fransisco based alternative lending platform is, despite a scandal, on a tear but won't become a bank.

SoFi has closed a $776.7m securitization of its student loan book, offering SoFi Professional Loan Program 2017-E notes but has also shelved its banking ambitions. 

SoFi 2017-E marks the company's largest asset-backed securities issue to date and its 10th ABS transaction this year, bringing SoFi's total issuance for 2017 to $5.375bn.  Since inception, SoFi has closed 30 transactions totaling $12.4bn in issuance. With the closing of SoFi 2017-E, SoFi maintains its position as a top ten ABS sponsor. The recent transaction was heavily subscribed with orders totaling $2.3bn.

"We were pleased with the reception for this transaction, which was increased in size in response to investor demand," said Ashish Jain, Senior Vice President of Capital Markets for SoFi. "The deal attracted five new investors, expanding the reach of SoFi's overall program to just over 100 unique ABS investors in 2017.  We thank everyone who participated in this offering."

While the firm is clearly doing well on the origination side, as well as seeing plenty of backing for its credit underwriting from institutional investors, scandal has recently hit the firm.

Its CEO and co-founder Mike Cagney was forced out recently owing to two former SoFi employees filing lawsuits alleging sexual harassment. 

"To be blunt, that kind of behavior has no place at SoFi, and we’re not going to tolerate it," Cagney said following the news. Nonetheless, this has also led to their recent withdrawal of an banking application. 

The US leader in the marketplace lending market wanted to offer checking accounts under its new SoFi Bank brand but has withdrawn its application owing to the scandal.

SoFi is the first Student Loan ReFi issuer to achieve AAA ratings from Standard & Poor's, Moody's and DBRS, and the first Unsecured Personal Loan issuer to achieve AA ratings from S&P, Kroll, and DBRS.

Joint lead managers were Deutsche Bank, Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley.

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