Student Loan Corp. the nation's largest lender of insured student loans, will not re-enter the asset-backed securities market after a long hiatus despite its securitization-friendly confines, according to an official close to the situation, and instead will continue to fund through whole-loan sales.
The decision to take the whole-loan route comes even as majority owner Citibank has made an offer to buy the remaining stock from the student loan lender.
While the source did not rule securitization out for the future, he did peg that decision on the amount of revenue currently in company coffers.
"We have enough funding and enough capital that there's nothing planned right now," he said.
"I could grow at double the pace that I am right now and still have enough capital."
This is a potentially serious boast, as the company has increased its loan portfolio 21% over the last year to total $10 billion. But, said the source, the market would need to rally significantly to get the company back to the ABS market, no matter the volume on its books.
"The all-in cost to securitizing is going to be about 15 basis points higher than what I have right now," he said. "It will do nothing to my risk.
"If I didn't have the cash and capital it would be a different story."
Student Loan Corp. is now 80% majority owned by Citibank, a subsidiary of Citigroup, which is made up of merger partners and securitization underwriters Citicorp and Salomon Smith Barney. Several weeks ago, Citibank announced its intention of buying the remaining outstanding equity of Student Loan Corp.