Via underwriter Citibank/ Salomon Smith Barney, the National Education Loan Network (NELnet) closed its second student loan net interest margin, a $60 million deal that priced at undisclosed terms on Dec. 27.

As in its previous student loan NIM (dubbed SLIM), MBIA wrapped the transaction to a triple-A, rated by Standard & Poor's and Fitch. Interestingly, this most recent NIM monetizes the residuals of a securitization trust NELnet took ownership of when it acquired EFS in late 2001. EFS, a student lender, is parent company of EFS Services and EFS Finance Company.

According to market sources, the securitization, called NELnet Group Trust II Securities, references residuals from one of two EFS securitizations from 2000, when the company brought approximately $1 billion in student loan ABS to market. EFS brought no deals in 2001, and is said to have a significant portion of unsecuritized loans in its $3.5 billion portfolio, which is now a part of NELnet.

NELnet's last student loan NIM, which priced in April 2001, was funded by the residual cashflow of two underlying trusts, NELnet I (2000), 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. The triple-A rated, $57 million deal, priced at 63 basis points over swaps.

In 1998, NELnet's predecessor, called Nebraska Higher Education Loan Program (NHELP), structured what is believed to be the first student loan NIM, 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.

Because NELnet is the only student lending entity to utilize NIMs as part of its funding/balance-sheet management strategy, players are hesitant to call the occurrences an industry trend.

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