Sallie Mae Bank's Smart Option student loans will secure $2.3 billion in asset-backed securities (ABS) that the sponsor will sell to investors.
April 15 is the closing date for the deal, according to Morningstar DBRS, which will issue floating-rate notes, through the A-1B tranche, indexed to the 30-day average Secured Overnight Financing Rate (SOFR), while underlying variable-rate loans are pegged to either CME Term SOFR or the 30-day average SOFR, DBRS said.
The ABS will be issued through five tranches of class A, B, C and D notes, DBRS said. They start monthly repayments on May 15, 2026, with a Nov. 16, 2054 legal final maturity date, he said.
The SMB Private Education Loan Trust, series 2026-C notes benefit from subordination, overcollateralization, reserve accounts and excess spread, DBRS said. Initial overcollateralization ranges from 5.50% on the class A notes to -8.50% on the class D notes, the rating agency said.
Meanwhile, subordination ranges from 12.90% on the class A notes to 7.37% on the class C notes. SMB 2026-C also benefits from a senior and a subordinate reserve account and excess spread, DBRS said.
At closing, the senior and subordinate reserve accounts will be funded with amounts equal to 0.25% of the class A notes' initial principal balance, and it will be maintained at that level, DBRS said.
As for the subordinate reserve account, it will benefit classes B, C and D and be fully funded at closing in an amount equal to 4.96% of the tranches' initial principal balance. The deal will maintain that level prior to the July 2026 payment date and adjust to 0.25% after that for the rest of the term of the deal.
The pool of 119,178 loans have an average per-borrower balance of $19,396. On a weighted average (WA) basis, the loans have an interest rate of 11.44%, and an original FICO score of 748.
The loans are predominantly fixed rate (90.3%), while CME Term SOFR and 30-day average SOFR benchmarks account 0.7% and 9.0%, respectively.
DBRS assigns AAA to classes A1A and A1B; and AA, A and BBB to classes B, C and D notes.
