North Texas Higher Education trust issues $50 million in student loan ABS

The North Texas Higher Education Authority is coming to the securitization market to sell $50 million in bonds, backed by a pool of private student loans.

The senior series 2025A is a mix of fixed-rate serial bonds, with maturities spread out over several years, and term bonds, with a single maturity date, according to analysts at S&P Global Ratings. North Texas Higher Education will issue senior series of bonds, with five maturity dates ranging from June 1, 2030 to June 1, 2046.

BofA Securities is underwriter on the deal, which is expected to close on October 1, S&P said.

The notes benefit from 30.1%-31.5% in credit support, derived from excess spread, a cash reserve account, overcollateralization and subordination. The credit support levels provide coverage of around 4.0x-4.2x of S&P's expected net loss rate of 7.5% for the pool, the rating agency said.

At closing, S&P said, it expects the deal to have an initial bond parity of at least 145.3% at closing. To release funds the deal requires an overall parity ratio of 148.0%, and a minimum net asset requirement of at least $20 million. The overall parity ratio is the value of all assets in the trust state, as a percentage of the aggregate principal amount and accrued interest on all outstanding bonds—plus any accrued but unpaid senior transaction fees that can be allocated, S&P said.

The 2025A bonds will have parity with all senior bonds that have been previously issued, and any senior bonds issued in future deals, S&P said. It is also senior to any additional subordinate bonds that the master trust will issue in the future.

As of the pool's cutoff date, May 31, 2025, 88.2% of the underlying loans were cosigned, and most of the pool 55.7%, had in-school deferments. Otherwise, 42.0% of the loans in the pool are current on repayments.

In other collateral pool characteristics, no more than 70% of the principal balance will be from deferred loans, and at least 70% of the loans' principal balance will have FICO scores equal to or greater than 740.

None of the loans were extended to borrowers attending proprietary schools, and no more than 10% of the loans will have FICO scores equal to or less than 700.