DBRS Assigns Provisional Ratings to SoFi Consumer Loan Program 2016-5

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 2016-5 (SCLP 2016-5):

-- $188,267,000 Fixed-Rate Class A Notes at A (sf)
-- $25,378,000 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 SCLP 2016-5 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 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 92.1% of the pool) and variable-rate (comprising 7.9% 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 who purchased the loans from the sponsor.

The structure is relatively straightforward: a fully funded reserve account (0.50%), overcollateralization (14.55%) and subordination in the form of the Class B Notes (10.15%), which is very similar to the SCLP 2016-3 transaction structure. The Class A Notes will bear interest based on a fixed rate that will be determined at pricing. The Class B Interest Rate is the stated interest rate for the first distribution date (referred to as the Class B Stated Interest Rate). Thereafter, a formula governs the Class B interest amount. The formula is the lesser of the Class B Stated Interest Rate or an amount referred to as the Class B Cap Rate. The Class B Cap Rate is interest accrued on the Portfolio Loans after deducting the sum of the Senior Transaction Fees and interest on the Class A Notes. Any shortfalls to the Class B Notes based on this cap will be paid as carry-over amounts in the waterfall.

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.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.