The Rhode Island Student Loan Authority is preparing to sell $126.9 million in asset-backed securities, secured by a pool of fixed-rate, in-school and refinance student loans originated under the authority's student loan programs.
Series A notes account for seven tranches in the deal, while 2024-1 tranches account for the other two. The nine total tranches in the deal, known as RISLA, make up the seventh issuance out of the 2018 master trust indenture, and will have parity with bonds that were previously issued from the trust. Further, the trust will have a 113.0% parity ratio after the bonds are issued.
The deal has a loan acquisition period that ends Oct. 1, 2025, and during that time RISLA will acquire about $158.5 million in new refinance and in-school loans, the rating agency said.
The transaction will issue fixed notes, which have expected maturities ranging from Dec. 1, 2028 through Dec. 1, 2043, according to analysts at S&P Global Ratings. Also, S&P intends to assign AA ratings to all nine tranches, it said.
RBC Capital Markets is lead underwriter on the deal, the rating agency said.
The bonds have 11.6%-12.1% in credit support available, ratings analysts said, which takes into account AA stressed, break-even cash flow scenarios. The credit support provides coverage about 6.7x-7.0x, the rating agency said.
A fully funded reserve account, equal to the greater of 2% of the outstanding bond principal balance and $4.2 million, will help ensure the timely repayment of notes and shore up credit. At closing, the trust indenture will have a reserve account of $8.6 million, representing 2.02% of the total trust outstanding bond's principal amount, the rating agency said.
On an aggregate basis, the current trust has an aggregate outstanding principal amount of $280.8 million. The collateral pool contains 9,919 loans, which have an average outstanding principal amount of $28,318 per borrower. On a weighted average (WA) basis the loans have a coupon of 5.54% and an average remaining term of 144.1 months.
In-school deferred repayment loans account for the largest percentage of the pool (46.0%), while in-school deferred loans are the next largest concentration (18.6%), S&P said. As for the pool's distribution by status, 63.6% are in repayment, the largest percentage, S&P said.
