Steve Eisman, the fund manager from The Big Short, says a credit cycle is emerging and SoFi Technologies (NASDAQ:SOFI) may be sitting at the center of it.
“There is no doubt in my mind that a credit cycle is emerging,” Eisman said on his weekly podcast.
He devoted a significant chunk of the episode to SoFi’s securitization problems, calling them “potentially a disaster.”
How The Trigger Works
Eisman broke the mechanics down.
SoFi makes consumer loans, pools them into securitizations, and sells the debt to investors.
SoFi charges borrowers 10%, pays securitization investors 5%, and keeps the spread. That spread is SoFi’s entire margin.
When losses breach a preset level called the cumulative net loss trigger, SoFi stops getting paid.
Eisman cited Bloomberg data showing SoFi’s SCP 2025-1 securitization hit CNLs of 2.97% against a trigger of 2.60%.
Everything now goes to securitization investors until they’re made whole. He added that the 2025-2 deal looks likely …
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