Credit Suisse plans to securitize the residual interest on a legacy private student loan ABS in its latest deal called Credit Suisse ABS Repackaging Trust 2013-A (2013-A).
The structure will offer $178 million of ‘BBB’ notes rated by Fitch Ratings. The notes are backed by backed by excess cash released from the Access Group’s 2010-A trust.
Access Group is a not-for-profit student loan lender based in Wilmington, Delaware, that specialized in lending to law school students in the U.S. It was the largest originator of Federal Family Education Loan Program (FFELP) GradPLUS loans in the nation and in 1986 expanded the program to include supplemental private loans to meet the borrowing needs of law students that were not being met by the FFELP.
Access Group suspended private student loan lending in April/May 2008 due to the credit crisis and has not yet re-entered.
The 2010-A deal was structured with a single class of A notes, which are currently rated ‘AAA’/Stable by Fitch. The notes are backed by private student loans made prior to May 2008 to graduate law and other professional students under Access Group’s private student loan programs.
Fitch said in its presale report that the key risk factors that drive the performance of the underlying trust also drive the performance of the CSART 2013-A trust. These risk factors are: defaults, prepayments, interest rate levels, basis spreads, borrower benefits and forbearance levels.
The underlying trust has been steadily building up credit enhancement. As of April 25, 2013, overcollateralization as a percentage of total asset balance was 48.8%, an increase of 9.2% from 39.6% at closing. Life-to-date cumulative defaults stood at 6.4% of the initial pool balance.
Another positive is that the Access Group recently transferred servicing of the underlying trust to Xerox Education Services, which Fitch said is “an acceptable servicer of private student loans.”