DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2016-2

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following Class A Notes and Class B Notes (the Notes) issued by SoFi Consumer Loan Program 2016-2 (SoFi 2016-2):

-- $425,880,000 Fixed-Rate Class A Notes at A (sf)
-- $54,670,000 Fixed-Rate Class B Notes at BBB (sf)

The DBRS ratings of the Notes address the timely payment of interest and the full payment of principal in accordance with the terms and conditions of the SoFi 2016-2 transaction documents.

The provisional ratings are based on DBRS’s review of the following analytical considerations:

-- The transaction’s form and sufficiency of available credit enhancement.
-- The quality and credit characteristics of the consumer loan borrowers.
-- Structural features of the transaction that require the Notes to enter into full turbo principal amortization if certain performance triggers are breached or if credit enhancement deteriorates.
-- The experience, underwriting and origination capabilities of SoFi.
-- The ability of the Servicer to perform servicing and collections on the collateral pool and other required activities.
-- The ability of Systems and Services Technologies (SST) to perform duties as a backup servicer.
-- The legal structure and expected legal opinions that will address the true sale of the student loans, the non-consolidation of the trust, that the trust has a valid first-priority security interest in the assets and the consistency with the DBRS Legal Criteria for U.S. Structured Finance methodology.

The notes will be collateralized by a pool of fixed-rate (comprising 87% of the pool) and variable-rate (comprising 13% of the pool) unsecured consumer loans that fully amortize over their set maturity terms. Prior to their issuance, these loans were funded and owned by the sponsor, its financing subsidiaries or investors that purchased the loans from the sponsor.

The structure is relatively straightforward: a fully funded reserve account (0.50%), overcollateralization (16.50%) and subordination in the form of the Class B Notes (9.50%) support the Class A Notes. The Notes will bear interest based on a fixed rate that will be determined at pricing. Interest on both classes of Notes will be paid on a monthly basis beginning on the distribution date in October 2016.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating U.S. Structured Finance Transactions, which can be found on our website under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

Please see the attached appendix for additional information regarding sensitivity of assumptions used in the rating process.

The full report providing additional information and analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.