The New Jersey Higher Education Student Assistance Authority (HESAA) is preparing to issue $226.5 million in revenue bonds that will help fund new private student loan business through April 2026.
A portion of the proceeds will also refund some outstanding HESAA indenture bonds from the 2014-1 series, according to ratings analysts. The deal is slated to close on May 30, S&P Global Ratings said.
RBC Capital Markets and Sieber Williams Shank will underwrite the deal, which will sell fixed-rate, classes A, B and C notes to investors, according to S&P. HESAA aims to originate about $200 million in new private student loans with the proceeds during the deal's origination and recycling periods. The pool securing the bonds is expected to have 22,350 loans representing about 17,973 borrowers, with an outstanding average principal balance of $17,619, the rating agency said.
Broken down by product type, the agency's NJCLASS Standard Fixed product should account for a large majority of the loans, 75.4%, the rating agency said. NJCLASS Consolidation will account for the next-largest group, 14.1%, S&P said.
S&P points out that the underlying student loans have several credit-positive aspects. For one, borrowers—and their cosigners—have an average original credit score of 756. Also, on a weighted average (WA) basis, the loans have an average remaining term of 148 months, and they have an average annual interest rate of 5.92%, the rating agency said.
The trust will issue about 16 tranches of the revenue bonds, and S&P intends to assign AA ratings to virtually all of them, except the subordinate 2024C series, which will get a BBB rating. The notes are expected to mature on December 1 every year, beginning in 2027.
