The Indiana Secondary Market for Education Loans is preparing to issue $29.6 million in tax-exempt, student loan program revenue bonds, raising the proceeds through its INvestEd's 2022 master trust for the first time. The trust will issue fixed-rate serial and term bonds.
The trust will purchase about $33.6 million of existing private student loans through INvestEd's Tuition and Refinance Student Loan Programs, and only those that adhere to its specific loan program guidelines, according to S&P Global Ratings.
The entire balance of loans must be originated under the issuer's Tuition Loan Program, and borrowers must be attending a degree-granting school. All of the loans must be fixed rate, and at least 90% of the loan balances must be to borrowers with a cosigner, according to S&P.
BofA Securities is serving as underwriter on the deal, which will repay issued notes on a following a senior-subordinate sequence.
Seventy percent is a preferred boundary line in the program, according to rating agency findings. No more than 70% of borrowers could have selected the deferred payment option (69.6% of them do), and at least 70% of borrowers had to have FICO scores of at least 740, the company said. At least 5.0% of the total loan balance must be to borrowers who select the immediate repayment option.
As for the collateral, some 2,664 loans are in the pool. On average the loans have an outstanding principal balance per borrower of $21,422, and a principal balance per loan of $12,617, according to the rating agency. Some 46.8% of the loans are held by borrowers still in school, while 39.3% are current or in repayment.
During the transaction's loan acquisition period, which ends April 1, 2023, INvestEd expects to originate about $5.0 million of new private student loans.
S&P expects to assign 'A' ratings to all of the notes, and expected maturity dates range from June 2024 through June 2039, said S&P.
