Nelnet Student Loan Trust is preparing to issue 2025-D is preparing to issue $745.1 million in asset-backed securities (ABS), with revenue from a pool of private student loans acting as collateral.
The deal is coming to market from Santiago Sponsor, with a long list of initial purchasers, including
NSLT 2025-D comes to market as the private student loan sector is seeing increased issuance. In Q3, student loan (ABS) issuance was $8.2 billion, a $1.4 billion increase from the previous quarter, and a $1.5 billion increase from the same period, a year earlier. Two of the program's deals, series 2025-B and 2025-C, accounted for $4 billion of issuance, almost half the sector's production.
It will sell notes to investors through five tranches of notes, four of which are fixed rate, the rating agency said. According to the deal's capital structure, the class A notes will issue the bulk of the notes, $300.6 million. Also, the tranche could be split into A-1A and A-1B pieces, and the latter could issue floating-rate notes benchmarked to the Secured Overnight Financing Rate (SOFR).
Moody's says all the notes have a legal final maturity date of Aug. 20, 2054. The notes have a total initial hard credit enhancement level of 17.68% on the class A notes; and 8.57%, 2.82%, and -2.09% on classes B, C and D. A reserve fund representing 0.25% of the note balance.
The interest rate mismatch from the one tranche is not expected to pose much of an issue, because around 60% of the notes will pay investors a fixed-rate of interest, while 59% the underlying assets are fixed-rate student loans, Moody's said.
Some 52,730 loans, extended to 26,775 borrowers, are in the collateral pool, according to Morningstar DBRS, which also rated the notes. The rating agency noted several positive attributes, including the portfolio's weighted average (WA) 762 original credit score (FICO).
The loans were originated with certain characteristics—and to certain audiences—that make them less likely to default. About 82.7% of the loans had cosigners, 92% of the borrowers are attending four-year schools, and 93% of the borrowers are attending not-for-profit schools, DBRS said.
Moody's assigns Aaa to the A notes. DBRS assigns AAA to the A1 notes; and AA, A and BBB to classes B, C and D, respectively.
