When Sallie Mae spun off its student loan servicing business this year to focus on making private loans, it said that it would sell a portion of the origination. A pretty large portion, as it turns out.
The company said today it had completed its first private student loan securitization as a standalone company; the deal, SMB Private Education Loan Trust 2014-A, is backed by approximately $380 million of Smart Option Student Loans. Though the issue has a public credit rating, from Standard & Poors, it appears that it was a custom deal. All of the securities, including the entire residual interest in the loans, were privately placed with a single, third-party investment manager, according to the company statement.
Pricing was not disclosed.
Sallie Mae also signed a definitive agreement to sell a much larger portfolio of loans, approximately $820 million, to Navient Corp., the business that it spun off. The loan sale is expected to close in August.
To put those numbers in perspective, Sallie had $6.5 billion in private student loans on its books at the end of 2013, pro forma for the spin off, which was completed at the end of April. It also held on to $1.4 billion in Federal Family Education Loan Program (FFELP) loans.
Navient, which had a portfolio of $31 billion in private loans and $103 billion in FFELP loans at the end of 2013 (pro forma) is also in the market with six FFELP securitizations this week, according to regulatory filings: the $263 million Navient Student Loan Trust 2014-2; the $263 million Navient Student Loan Trust 2014-3; the $263.4 million Navient Student Loan Trust 2014-4; the $158.3 million Navient Student Loan Trust 2014-5; the $158 million Navient Student Loan Trust 2014-6; and the $158 million Navient Student Loan Trust 2014-7.
Each deal is backed primarly by consolidation loans and consists of two classes of notes, a senior class maturing in 2043 and subordinate class maturing in 2054.
Navient has also securitized private student loans since the spin off. In July it completed the $462.5 million Navient Private Education Loan Trust 2014-CT, which is backed primarily by private career training loans.