Two hired rating agencies, S&P and DBRS,
are expected to assign single-A ratings to the senior portion of SoFi’s $250m
deal, in a development that would typically help win over investors unfamiliar
with new credits.
For S&P, that represents something of a U-turn. S&P analyst Ildiko Szilank, who on Wednesday afternoon was unaware of S&P’s participation on the SoFi deal, wrote in April that an untested economic cycle, the new lending model and regulatory hurdles would prevent S&P from rating any peer-to-peer securitizations.
“As the peer-to-peer lending market evolves, questions have persisted about the future role of securitizations in this sector. However, Standard & Poor's Ratings Services believes there are some hurdles that need to be cleared before we assign ratings to such transactions,” Szilank wrote with analyst Robert Chiriani.
April Kabahar, a spokesperson for S&P, had not responded to a request for comment by press time.
SoFi, which wooed investors last year with its pitch of being a tech-forward and socially conscious lender, is also said to have sidestepped bank partners and irked potential investors in what is only its second round of asset-backed financing.
A single buyer approached SoFi with an offer to buy over half of the notes, two buysiders shut out of the deal told GlobalCapital.
Morgan Stanley was structuring lead on the transaction and Goldman Sachs was co-lead. Spokespeople contacted at SoFi did not return requests for comment. Morgan Stanley spokesperson Mark Lake declined to comment on the matter.
One banker with knowledge of the transaction and its pricing discarded the claims as false rumors. An investor contacted two weeks ago about the deal, however, said the mystery buyer acted with “a different set of ethics” and that SoFi could expect “unpleasant feedback” from investors in their next roadshow.
The deal’s two tranches will pay investors 160bp over one month Libor and 165bp over swaps, according to people with knowledge of the deal.
Western Asset Management was one large buyer in the deal, according to the Financial Times. Other buyers could not be confirmed by time of press.