A portfolio of fixed-rate, private student loans the Pennsylvania Higher Education Assistance Agency originated through the Forward Student Loan Program will secure $146.1 million in asset-backed securities (ABS), due to hit the market at the end of April.
The transaction, Pennsylvania Higher Education Assistance Agency (PHEAA) will issue six tranches of senior 2024-1A and a subordinate 2024-1C class of notes, according to S&P Global Ratings. The senior notes start to mature in June 1, 2029, beginning with the $11 million tranche, and another tranche matures every year on the same date through 2045, S&P said. The subordinate notes mature in 2051.
S&P assigns AA to the senior notes, and BBB to the subordinated tranche.
Like the underlying loans, all the notes are fixed rate, S&P said. They have 39.7% and 21.2% in credit support for the 2024-1A and 1C subordinate notes, respectively, S&P ratings analysts said. Senior 2024-1A notes benefit from 25.3% in subordination, but PHEAA can redeem the subordinated bonds if it results in a senior parity percentage is at least 154.0%, and the total parity percentage is at least 121.0%.
A $2.9 million debt service reserve fund will be in place at closing, representing 2.00% of the outstanding bond balance after the 2024 issuance, which must be maintained at either 2.00% of the total outstanding bond balance, or 0.35% of the total bond principal amount outstanding at issuance, whichever is greater.
Also, PHEAA's has a capitalized interest fund totaling $8 million, to pay interest and principal shortfalls on any bond payment date. It can also cover servicing and administrative fees and indenture expenses. If any proceeds are available on Jan. 1, 2028.
The levels of credit support provide coverage of at least 4.2x and 2.2x for the 2024-1A and 2024-1C notes, respectively, S&P said. The notes also benefit from excess cash, which can be released from the trust if the total parity percentage is at least 121.0%, the rating agency's analysts said.
