A recent Barclays Capital report highlighted the slowdown of the private credit student loan ABS market where issuance has dropped 60% from the same time last year. The only two ABS deals to price since mid-July were from this year totaling $1.4 billion.
The report stated that the two deals from this year were from Sallie Mae, which had a 68% market share over the same period in 2010. Barclays also cited that private credit student loan ABS issuance made-up only 15% of the total student loan ABS issuance year-to-date, down from 34% in 2010 and 44% in 2009.
However, collateral performance, default rates, and loss performance were all generally better.
Older vintage deals continued to recover faster than more recent transactions, which the report attributed to credit burnout and a struggling job market for new college graduates.
Barclays reiterated its recommendation for investors to buy current- and next-pay classes of private credit student loan ABS, based on analysts' conclusion that these classes were better suited to sustain issues in collateral performance.
Despite the slowness of the market, the recent report expressed optimism that private credit student loan ABS issuance may pick-up during the second half of this year based on previously observed trends.
Meanwhile, a Barclays report from May makes several conclusions on the private credit student loan market, suggesting that the percentage of loans in forbearance is indicative of the restrained use of this loss mitigation tool by servicers.
Barclays' May 2011 report also highlighted the lack of loan - level performance data, which makes the roll - rate analysis meaningless.