Michigan Finance Authority plans to issue $303 million of securities backed by Federal Family Education Loan Program collateral.

Standard & Poor’s expects to rate the notes, due April 2030, ‘AA+’. The structure also includes $9 million of subordinate, unrated class B notes.

FFELP loans are at least 97% reinsured by the U.S. government. As a result the transaction relies on the long-term sovereign rating on the U.S. federal government, which S&P lowered to 'AA+' from 'AAA' in 2011.

The transaction pool is comprised of 85,186 loans: Stafford loans make up 83% of the pool, consolidation loans make up 12.7% of the pool and Parent Loan for Undergraduate Students (PLUS) loans account for 4.5% of the pool.  

Over half of the loans (69%) are in repayment status and generating cash flow; the remaining obligors are either in school  (1.3%), deferment (13.3%), or forbearance (16.0%) status.  The loans that have a weighted average balance of $3,625 to be paid over a WA term of 14 years.

Bank of America Merrill Lynch is the lead underwriter.


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