Sallie Mae is in the market with a Term ABS Loan Facility (TALF)-eligible $1.1 billion private student loan deal.
Fitch Ratings expects to place a AAA rating on the notes issued by SLM Private Education Loan Trust 2009-C. This is Sallies third private student loan transaction in 2009, according to a Fitch presale report released this morning.
The notes are backed by private student loans that were either originated or acquired by Sallie Mae or its subsidiaries in its ordinary course of business before being sold into the trust.
According to Fitch, Term ABS Loan Facility (TALF)-eligible borrowers can, at deal closing, finance the purchase of notes with 11% equity and a TALF loan at 89% of note principal balance.
From January 16, 2012 to June 15, 2012, the notes are subject to optional redemption in whole at 94% of the then-outstanding principal balance.
Upon maturation of the TALF loan on July 16, 2012, the borrower can either sell the notes to repay the loan or surrender all of the outstanding notes to the Federal Reserve Bank of New York in satisfaction of the loan, effectively forfeiting the 12% equity.
The collateral quality, transaction structure, credit enhancement and cash flow results as well as servicing capabilities were the key rating drivers for Fitch.
The trust collateral consists of private student loans and originated under Sallie Maes private student loan programs and underwritten to the respective guidelines.
The programs include the undergraduate and graduate student loan programs, law, MBA and medical loan programs, the private consolidation loan program and the direct-to-consumer loan programs.
As of the statistical cutoff date of May 22, none of the above loans were more than 30 days past due or involved in a bankruptcy proceeding.
The deal consists of a single class of senior notes. The parity ratio, or the total assets to total liabilities ratio, is expected to be 151.10% at deal closing. Liquidity support is provided by a reserve account, sized at $3,708,955, which is 0.25% of the pool balance, and a cash capitalization account sized at $188 million at closing.
Fitch reviewed transaction flows that were stressed at the levels commensurate with Fitchs AAA rating and deemed the cash flow results satisfactory under all stress scenarios.
In terms of servicing capabilities, day-to-day servicing will be provided by Sallie Mae, which currently carries a Fitch private student loan servicing rating of Proficient Plus. Fitch said it views Sallie's servicing capabilities as highly effective.
Preliminary details on Sallie Maes offering are available via the link below from the ASR Scorecard database.