The government’s move to change the index that student FFELP loan are tied to should have a slightly positive impact on related ABS, according to Moody’s Investors Service.

Beginning on April 1, the underlying index for FFELP loans will switch to one-month Libor from three month financial commercial paper (CP). In Moody’s view, this change will moderately cut basis risk for deals backed by FFELP loans because they tend to be priced against Libor, although at a three-month tenor. 

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