Nelnet recently closed Slims (student loan interest margin securitization), a net-interest margin (NIM) deal backed by student loans, which is a class of residuals that has only been repackaged for the term market one or two times before, according to market sources.
The $57.5 million, rule 144A offering was brought to market by Salomon Smith Barney, and featured a triple-A wrap from MBIA. According to IFR Mortgage Data, the one-tranche deal priced at 63 basis points over swaps.
The transaction is funded by the residual cashflow of two underlying trusts, last year's Nelnet I, and a deal from Maine Educational Loan Marketing Assistance Corporation, which has since been incorporated into the Nelnet group. The two underlying trusts have an aggregate value of $1.9 billion.
In 1998, the same management group that brought Slims structured a similar deal at Nebraska Higher Education Loan Program (NHELP), also via SSB. NHELP was later acquired by Union Financial Services, at which point the joined student loan-lending entity became Nelnet, along with other student loan lenders.
Nelnet was in the market with a student loan deal in late March worth approximately $480 million.
Though student loan NIMs present an innovative use of the technology, experts are not expecting that market to visibly take off, simply because there's not enough issuers with a backlog of deals.