A pool of private, in-school student loans and student loan refinancings originated through the New Hampshire Higher Education Loan Corp.'s EDvestinU. The trust, EDvestinU Private Education Loan Issue No. 4, is expected to issue about $182.7 million in notes.
The transaction is the third from NHHELCO to securitize a pool of refinanced student loans, as well as the third to securitize loans originated solely under the EDvestinU program, according to Morningstar | DBRS.
EDvestinU will issue notes through a sequential-pay structure, whereby the trust will pay no principal to the subordinate class B notes until the class A notes are paid in full. In another structural feature, a turbo feature, the trust will not release available funds will be released and the pay down of the notes will be accelerated.
In another important feature, the class A notes will benefit from the class B note interest trigger, according to DBRS. If the outstanding trust estate assets minus the outstanding Class A Note balance is less than $8 million, the trust will suspend interest payments to the class B notes. All interest not paid on the Class B Notes will accrue at the interest rate of the Class B Notes and be paid on a subsequent distribution date, the rating agency said.
The rating agency notes that the trust collateral exhibits high credit characteristics. On a weighted average (WA) basis, the borrowers have an income of $119,676, a debt-to-income ratio for refi loan borrowers of 26.8%, and an original credit score of 781.
In a potential credit positive, DBRS noted that refinanced loan borrowers are employed and have been making payments on the underlying loans for a significant amount of time. They have, therefore, a lower likelihood of defaulting compared with more typical student loan borrowers that might still be in school or just entering repayment.
DBRS expects to assign ratings of 'AAA' to the $161,7 million, class A notes, and 'A' to the $21 million, class B notes. S&P Global Ratings intends to assign similar ratings.
