SoFi (SOFI) – Credit Deals – March 16, 2024
Fitch rated a SoFi ABS deal as “AA.” We don’t really know which of its loans were included in this deal, so it’s hard to extrapolate this to mean the rest of the book is performing very well. What was notable was Fitch’s commentary on SoFi’s most recent loan vintages showing signs of improvement in performance. This marks an important inflection vs. the expected deteriorating performance throughout 2023 and into this year. Why is this so important? SoFi’s guide assumes continued worsening to a life of loan loss rate of 7%-8%. If it’s already seeing improvement, that bodes very well for 7%-8% representing a peak vs. that loss rate continuing to rise. It needs to represent a peak to maintain its strong balance sheet, underwriting reputation and capital market access. This is important and encouraging. Monumental? No. But if Fitch talked up continued deterioration that would be more monumental and much more negative. Morningstar also reiterated ratings on all SoFi credit deals.
