The Indiana Secondary Market for Education Loans is marketing $152.5 million of loans backed by federally guaranteed student loans, according to Fitch Ratings.

Fitch has assigned a preliminary ‘AAA’ to the notes, which benefit from credit enhancement of 3.54% and have a final maturity of February 2044.

The notes are backed by a pool of 13,998 Federal Family Education Loan Program Loans, which are 97% guaranteed by the U.S. Department of Education. The majority, 86.7%, are consolidation loans, which are much less likely to be refinanced than unconsolidated loans. Seventy-two percent of the borrowers attended a four-year school, as opposed to a two-year school. Nearly three-quarters (73.6%) of the loans are in repayment; another 15.3% are in forbearance and 11% are in deferment.

 The geographic concentration is low, with the top five states accounting for 39.9% of the pool. High geographic concentration could result in potentially higher forbearance, delinquency and claim levels due to rolling recessions, regional economic downturns or natural disasters, according to Fitch.

The Indiana Secondary Market for Education Loans is an Indiana nonprofit corporation that was incorporated in 1980 to serve as a secondary market for post-secondary education loans. Due to the termination of FFELP in 2010 ISM reorganized its business to focus on portfolio management, financial aid literacy and supplemental loan availability. ISM has over $300 million in assets and is currently governed by a nine-member board of directors that is appointed by the governor of the state of Indiana.

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