The student loan servicer Navient Solutions is marketing its second offering of the year of bonds backed by federally guaranteed student loan receivables, many of them rehabilitated.

Navient Student Loan Trust 2018-2 will issue four tranches of floating-rate notes totaling $748.6 million. The notes are, supported by a pool of $757 million in Federal Family Education Loan Program (FFELP) loans. About 19.8% of the 123,034 loans from 49,373 borrowers who were once delinquent but have been making timely payments for at least nine of the last 10 months.

Both Moody’s Investors Service and DBRS have assigned preliminary triple-A ratings to each of the classes: a $165 million Class A-1 tranche; $209 million in Class A-2 bonds; $363.6 million in Class A-3; and $11 million in Class B.

The deal has a reserve fund of 1.25% and initial overcollateralization of $18 million; OC will be paid down through an annual excess spread estimated between 0.75%-0.95% until it reached either 2.35% of the adjusted pool balance of $3.8 million.

Many of the features of the deal are similar recent Navient FFELP securitizations. The average account in the pool has a balance of $15,335 and a borrower interest rate of 5.5% with 161 months (13.4 years) remaining (the average seasoning is 56 months). The average borrower age is 44.6 years. The pool includes loans through the FFELP Stafford, consolidation, PLUS and Supplemental Loans for Students plans, with nearly 46% issued prior to 2006.

Moody’s expects net losses over the life of the deal to be about 0.95%; that's up slightly from 0.9% for Navient's prevous deal, NAVSL 2018-1 due to the longer remaining terms of the loans. The weighted average remaining term of loans backing NAVSL 2018-1 was only 152 months.

Navient has included 19.2% of loans either in deferment or in forbearance, and 16.8% are in income-based repayment plans that present longer amortization schedules.

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