DRB's Next Student Loan ABS Has Front-Pay, Back-Pay AAA Notes

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Darien Rowayton Bank is preparing to issue $307.5 million of notes backed by private loans used to refinance student debt.

DBRS expects to assign triple-A ratings to the senior tranches of notes to be issued by DRB 2017. The floating rate Class A-1 notes will be primarily secured by a group of floating rate refinancing Loans. The fixed rate Class A-2A notes and Class A-2B notes (together, the Class A-2 Notes) will be primarily secured by a group of fixed rate refinancing Loans.

There is also a tranche of Class B notes that will be secured by both the floating rate and fixed rate refinancing Loans.

The weighted average life is approximately 4.10 years for the Class A-1 Notes, 1.05 year for the Class A-2A Notes, 5.72 years for the Class A-2B Notes and 3.56 years for the Class B Notes

Credit enhancement for DRB 2017-A will consist of overcollateralization, a separate reserve account for the Class A-1 notes and the Class A-2 notes, a liquidity account for the Class B notes, subordination provided by the Class B notes for the benefit of the Class A notes, excess spread and limited cross-collateralization.

Generally, the Class A-2B Notes will not receive principal payments unless the Class A-2A Notes are paid in full.

The Higher Education Loan Authority of the State of Missouri is the backup servicer.

DRB 2017-A is the first DRB securitization consisting of front-pay and back-pay AAA notes whereby the Class A-2B Notes will not receive any principal until the Class A-2A Notes are paid in full.  Because of a longer duration, the Class A-2B Notes are exposed to more credit risk than the other AAA notes in the transaction

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