CommonBond Inc. has returned to the securitization market to pool its second collateralization of graduate-level private student loan refinancings.
The CommonBond Student Loan Trust 2016-A is a $153.2 million, three-tranche notes offering comprised almost entirely of loan refinancings through CommonBond or its partner institution, The Bank of Lake Mills in Watertown , Wis.
The notes are divided between a fixed-rate, Class A-1 notes tranche totaling $93.8 million, a floating-rate Class A-2 slice set for $48.6 million in notes issuance, and a Class B tranche of $10.8 million in notes.
The Class A-1 notes are backed by fixed rate loans, while the A-2 loans are backed by variable-rate borrowings. Both classes have been assigned a provisional ‘A (high)’ rating by DBRS, and have a maturity date of 2040.
The Class B notes have an early ‘BBB’ rating.
The initial overcollateralization of the Class A notes is 12.7%, supported by a reserve account for each Class A tranche as well as subordination of the Class B notes, excess spread and “limited” cross-collateralization, according to CommonBond. The reserve accounts total $539,350 for the A-1 tranche and $217,485 for the A-2.
The refinanced loans are all originations from CommonBond Lending LLC and The Bank of Lake Mills. CommonBond in December moved its originations business in-house from the bank, which will continue to originate the handful of in-school loans CommonBond underwrites for a particular school’s masters of business administration (MBA) graduates.
Like other private student loan issuers like online marketplace lender Social Finance, Inc. (SoFi), CommondBond concentrates on the private lending market of business, law and medical school graduates who have higher credit scores and incomes, representing a much better credit risk pool for investors. The weighted average credit score of borrowers is 768, with an average income of $139,847 that is supporting an average loan balance of $67,857.
According to a pre-sale report from DBRS, 97.4% of the pool are loans that come through CommonBond’s refinancing program.
The securitization is CommonBond’s first since issuing a $96 million ABS in June 2015.
The deal is slated to close April 21.