Interest rates may be headed higher, but for now, investors are still pretty hungry for yield. That makes some of the more esoteric corners of the asset-backed market pretty attractive. In our cover story, Felipe Ossa looks at one of these, the equity portion of securitizations of guaranteed student loans. The so-called residual interest in older FFELP securitizations are throwing off cash, making them attractive to some seasoned investors. Sallie Mae, one of the biggest holders of resids, went so far as to securitize, or resecuritize, a bundle of them. But this was probably just an exercise to establish a market price. For now, most of the activity is in the secondary market, where other players, including Nelnet, are buying up resids.
Several other stories look at asset classes that are truly new, and not just small and previously overlooked. Nora Colomer explains how SolarCity overcame numerous hurdles to obtain a credit rating for the first securitization of leases on residential solar panels. Since it was only low investment grade, some market participants wonder if it was worth the expense to widen the appeal, particularly of such a small deal. Other solar deals in the works may opt to go without.