South Carolina Student Loan Corporation has priced the $501 million SCSLC 2014-1 transaction that is backed by student loans guaranteed by the U.S. under the Federal Family Education Loan Program (FFELP).
The 2014 A-1 notes, rated AAA’/ AA+’ by Fitch Ratings and Standard & Poor’s and structured with a weighted average life of 6.5-years, priced at 75 basis points over one month Libor, according to Bloomberg. The notes were sold 15 basis points wider than the 8-year, class A notes issued by Navient Credit Finance Corporation earlier in the week.
At the subordinate level, South Carolina sold the 2014- B notes, rated AA’/ AA’ and due January 2033 at 205 basis points, 15 basis points tighter than the B notes issued from the Navient series of deals.
South Carolina’s trust collateral is comprised of FFELP loans with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest.
S&P assigned the senior notes a lower rating than Fitch because the rating on the bonds partially relies on the U.S. federal government's long-term sovereign rating. The ratings agency lowered its long-term sovereign rating on the U.S. to 'AA+' from 'AAA', in August 2011. “The U.S. Department of Education (ED) supports the bonds by reinsuring at least 97% of the principal and accrued interest on the defaulted loans and providing special allowance payments (SAP) to loanholders and, in some circumstances, interest rate subsidies to borrowers,” according to the presale report.