SoFi consumer loan trust 2026-3 set for Fitch ratings on ABS notes

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SoFi trust Fitch ABS rating

Highlights

SoFi Consumer Loan Program 2026-3 Trust comprises a static pool of unsecured, fixed-rate loans with weighted average credit score 747 and 12.45% net interest rate.
Fitch sets a base case gross default assumption of 8.45%, reflecting elevated managed default rates in 2022-2023 and modest improvement in the 2024 vintage.
Initial hard credit enhancement is 32.56% for class A notes, with total subordination levels deemed sufficient to support a potential 'AAAsf' rating stress scenario.

Transaction structure and rating basis

As reported by Fitch Ratings, SoFi Consumer Loan Program 2026-3 Trust is a discrete trust backed by a static pool of unsecured, fixed-rate consumer loans originated by SoFi Bank, National Association under the SoFi Loan Platform Business. SoFi Bank serves as sponsor, administrator and servicer for the deal, which is the 15th SoFi Bank-sponsored or program-sponsored ABS transaction and the seventh public SoFi transaction Fitch expects to rate.

The loan pool consists mainly of unsecured consumer loans to borrowers with strong credit profiles. Fitch says the pool has a weighted average credit score of 747, weighted average income of $153,440, a weighted average net interest rate of 12.45%, and a weighted average original term of 58 months, while the underlying loans have been seasoned for six months on a weighted average basis.

Credit performance trends and protection levels

Fitch says its base case gross default assumption reflects weaker recent performance, as SoFi's managed default rates increased in 2022 and remain elevated in 2023 compared with prior origination vintages since 2015. The agency also considers marginal improvement and signs of stabilization in the 2024 vintage, adding that short-term loans are stable and seeing higher prepayments while longer-term loans continue to show weakness.

Based on those trends, Fitch sets a base case gross default assumption for the pool at 8.45%. Initial hard credit enhancement totals 32.56% for class A notes, 24.36% for class B, 16.21% for class C and 8.46% for class D, which Fitch says is sufficient to cover stressed cash flow assumptions for all classes, including a 'AAAsf' rating stress of 4.5x the base case default rate.

Fitch also says servicing arrangements support the structure. SoFi has originated personal loans since 2015, and backup servicing from Systems & Services Technologies, Inc. helps mitigate operational risk, with Fitch viewing all parties as adequate servicers for the pool.

In our earlier coverage of the Federal Reserve’s policy outlook after an oil-driven inflation jump, we explained that officials had turned more cautious on inflation and that more policymakers began penciling in potential rate hikes for 2024. We also noted that a still-firm labor market and higher inflation projections were reducing the urgency for rate cuts, keeping borrowing costs elevated and policy expectations more hawkish.

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