College Ave Student Loans 2024-B is preparing to launch a $511 issuance of asset-backed securities (ABS) backed by revenues from a pool of loans from its in-school private student loans, in its tenth rated, term ABS deal.
College Avenue Student Loans, which operates online, is sponsoring the deal, which will issue A, B, C, D and E notes to investors through a pass-through capital structure of six tranches, according to ratings analysts at DBRS Morningstar.
Notes issued through College Ave 2024-B benefit from credit enhancement consisting of subordination through the B, C, D and E classes and a reserve account representing 0.50% of the total pool balance, DBRS said. The rating agency also noted excess spread and a capitalized interest account equaling $40 million, which will be available to pay interest on the notes as well as certain transaction fees, DBRS said.
Asset Securitization Report's deal database notes that most of the notes are priced against the three-month interpolated yield curve, with expected yields ranging from 6.53% on the AAA notes to 6.53% on the A notes. The one exception is the A1B tranche, whose notes are priced to the three-month Secured Overnight Financing Rate (SOFR).
Bank of America Merrill Lynch is on the deal as manager, according to the ASR deal database.
The collateral pool has an April 25 cutoff date, with an aggregate principal balance of $491.9 million. Firstrust Savings Bank and First Citizens Bank originated the loans, all of which are in-school, and a vast majority of the loans in the pool, 82.0%, are fixed rate, DBRS said. On average, the loans have a principal balance of $17,657, the highest such balance since the outsized $117,253 per loan seen on the College Ave 2021-C, the rating agency said.
On a weighted average (WA) basis, the loans have a total remaining term of 129 months, and among the fixed-rate loans, they have a WA coupon of 11.22%, DBRS said. Of the underlying borrowers, 93.3% are currently enrolled, and of those, 93% are studying at not-for-profit schools.
Full deferral and flat $25 payments account for 76.7% of the pool, according to the rating agency. The pool is also highly diversified, with New York, Pennsylvania and California accounting for 10.5%, 9.9% and 9.1% of the pool, according to DBRS.
DBRS assigns ratings of AAA to the A1A and A1B notes; AA to the class B notes; A to the class C notes; and BBB to the D and E tranches.
