Student loan player First Marblehead Corp. has been accumulating assets over the past two years as collateral for a potential return to the ABS market, said Gary Santo, a managing director at the firm, on the sidelines of ABS East. 

“We have to make sure the enhancement levels for deals make sense,” he said, describing the levels on recent transactions in the student loan space as “draconian.” But spreads are moving in the right direction for Marblehead to revisit the market. “I wouldn’t surprise me if in the not-to-distant future we did something,” he said. “It’s hard to say what it would look like, whether a term deal, a private deal, or something else.”

For now, Marblehead is able to tap banking funding that is cheaper than ABS funding, but as liquidity grows in the securitization market the equation could change. The firm last issued an ABS in 2007. 


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