The North Carolina State Education Assistance Authority is preparing to issue $69.2 million in student loan revenue bonds, secured by revenues from a portfolio of private student loans.
The securities, all of which are fixed rate, will be issued through six classes of notes. The notes have expected maturity dates beginning with June 1, 2031, and mature every year afterward, on June 1, until the final maturity date of June 1, 2045.
Bank of America Merrill Lynch is the manager and underwriter on the deal, according to S&P Global Ratings.
S&P finds that credit support to the bonds range from 28.48% to 32.30%. They provide coverage of about 3.0x-3.4x of its base-case net loss in the 'A' stressed, break-even cash flow scenarios.
Also, North Carolina State Education's 139.02% initial parity level—which is the percentage of the total assets, including outstanding loans and funds in the loan acquisition fund and the reserve fund, to the total outstanding bonds.
NCSEAA repayment structure also helps bolster credit to the notes, because it builds overall parity to a target of 145.0%. The deal also includes a fully funded reserve fund, which is equal to 2.0% of the outstanding bond principal balance and $1.5 million of the outstanding bond balance.
The pool consists of 4,925 borrowers on 9,369 loans, which have an outstanding balance of $23,946 per borrower and $12,588 per loan, according to S&P. Virtually the entire pool of loans, 93.8%, was extended to undergraduate students, and in terms of loan status, 89.2% is either in-school or in repayment.
As far as FICO score distribution, borrowers with scores between 700-739 account for the largest segment, 42.0%, followed by those with scores ranging from 740-779. Also, the underlying loans are almost evenly split between co-signers and non-cosigners, 50.8% and 49.2%, respectively.
