Sallie Mae said it extended the term of its $21.8 billion ABCP facility that provides funding for the company's federally guaranteed student loans from April 28, 2009 to April 23, 2010.
The company's private education loan ABCP conduit facility with $2.7 billion outstanding was paid in full.
The facility's extension provides liquidity for the company while the U.S. Department of Education (DoE) finalizes its plans to implement the ABCP conduit it developed and as the company evaluates several other funding opportunities.
The extension of this facility provides liquidity for the company while the U.S. Department of Education finalizes its plans to implement the ABCP conduit it developed and as the company evaluates several other funding opportunities.
Sallie Mae has been able to bring this facility down to the $21.8 billion from $28 billion in January.
According to market analysts, this was accomplished this through over $5 billion in securitizations of consolidation loans over the past month.
Together, these federal student loan ABS transactions had an average life in excess of 7.5 years and spreads of 225 to 280 basis points over Libor. However, these transactions carry a high cost, especially considering the fact that 100% of the underlying loans could default and the security holders would still be paid in full, they do provide life of loan funding for assets that are not eligible for the DOE conduit.
