Sallie Mae latest private student loan securitization does something that won’t be possible once risk retention rules take effect: it gets the assets completely off of its balance sheet.

In a press release published Friday, the lender said that it has priced all of the notes to be issued by SMB Private Education Loan Trust 2015-A, including $704 million of notes and the residual interest in the deal, valued at $50 million.

Barclays, Credit Suisse and JP Morgan were the lead managers.

The residual interest, which is unrated and has an estimated average life of 10.79 years, was priced at 96.5% of face value to yield 4.5%.

By comparison, a $75 million tranche of 9.75-year notes with an ‘A’ rating from Standard & Poor’s pays 3.5%. There are also four tranches of ‘AAA’-rated notes: a $70 million 8.5-year tranche pays one-month Libor plus 150 basis points; an $82.0 million 5.9-year tranche pays Libor plus 100 basis points; a $164 million 5.9-year tranche pays 2.49% and a $263 million 1.75-year tranche pays Libor plus 60 basis points.

The transaction is anticipated to settle on or about Thursday, April 23, 2015, pending completion of documentation. On that date, the principal balance of the loans backing the trust will no longer be on Sallie Mae Bank’s balance sheet. As a result, the company expects to realize a pre-tax gain on the sale of $78 million, which it said is a 10.5% premium over the book value of the loans.

The loans were made and underwritten under various loan programs that Salle Mae administered or sponsored to provide private funding for students enrolled in traditional, four-year programs (94.4% of the pool), two-year programs (4.2%), and proprietary and vocational programs (1.3%), according to S&P.  The loans have an average outstanding balance of $17,091 and pay on average a rate of 8.21%. Only 8% of the loans included in the pool do not have a co-signer; cosigned loans tend to outperform non-cosigned loans.

Sallie Mae Bank will continue to service the loans in the Trust.

Sallie Mae Bank currently licenses its loan originations platform from Navient and expects to have its own origination platform ready sometime in the first half of 2015. The issuer completed the operational separation of its servicing platforms and personnel from Navient on Oct., 13, 2014.

Based on the information that the sponsor and Navient Corp. provided and comparisons of similar loan characteristics over time, S&P expect the transaction's cumulative default rate to be in the 13.00%-14.00% range.

By assuming a 25% cumulative base-case recovery rate, S&P expects the SMB 2015-A transaction's cumulative net loss rate to be in the 10.5%-11.0% range.

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