Nelnet is prepping its second deal of 2014, according to a pre-sale report by Moody’s Investors Service.
The deal, for $509 million, is backed entirely by loans under the Federal Family Education Loan Program (FFELP).
The government’s Department of Education insures these loans for no less than 97% of the defaulted principal and accrued interest.
Moody’s estimates an expected net loss on the pool backing the transaction of 0.45%.
The deal consists of four tranches. (For tranche details see table further below). Three are senior. The subordinated piece provides 2.36%.
In Moody’s view the master servicer, Nelnet, is low risk, although it has signed subservicing agreements with Nelnet, Great Lakes Educational Loan Services, Pennsylvania Higher Education Assistance Agency, and Xerox Education Services.
The collateral has a fair degree of seasoning. Some 77.4% of the loans are in repayment status and 100 weighted average months in repayment. Nearly a fourth of the collateral are rehabilitated FFELP loans.