A pool of private student loans will secure $495 million in asset-backed securities from the SMB Private Education Loan Trust, series 2024-F.
SMB will issue notes through three tranches of class A and B notes, according to Moody's Ratings and Morningstar DBRS. Sallie Mae underwrote all the loans through the Smart Option student loan program, DBRS said.
DBRS said the deal will operate using a traditional pass-through structure. The transaction will repay investors principal sequentially, while the class B notes provide subordination to the class A notes, the rating agency said. All the notes have a legal final maturity of March 16, 2054.
Moody's assigns ratings of Aaa to the A-1A and A-1B notes, while DBRS assigned AAA ratings to both class A tranches and AA to class B notes.
Moody's says one of the transaction's key credit strengths is the loan pool's quality. Sallie Mae originated the loans beginning in 2009, extending them to borrowers attending undergraduate and graduate schools. They are typically of higher credit quality, because the borrowers have higher credit scores and a higher percentage of co-signers.
On a WA basis, the loans have been in active repayment for 16 months.
There is also minimal risk stemming from any mis-matching of fixed and floating rates among the assets and transaction notes. Between 80%-90% of the notes pay a fixed rate, while 78% of the loans are fixed rate. Also, at closing SMB 2024-F has not entered into a basis swap agreement.
Overall, the deal benefits from 7.1% in overcollateralization, and the class A notes receive subordination equaling 6.9% of the note balance. There is also a non-declining reserve account representing 0.25% of the initial pool balance, Moody's said.
The pool contains 35,396 loans with an average balance of $15,485. On a WA basis, the loans have an interest rate of 11.2%, and an original FICO score of 743, Moody's said.
