Student loan ABS

Any risk of mis-matching of fixed and floating rates among the assets and transaction notes is minimal. Between 80%-90% of the notes pay a fixed rate, while 78% of the loans are fixed rate.

The bonds exist with several redemption provisions, including the first maturity date, a special redemption option from excess revenues, and a special mandatory redemption from excess revenues.

This is ECMC's first securitization of a pool of rehabilitated loans since 2021.

The action stems from 2017, when the CFPB filed a lawsuit claiming Navient steered borrowers who might have qualified for income-driven repayment plans into more expensive forbearance instead.

The AA, A and BBB notes have 12.7%, 12.5% and 7.0% in credit support, which included excess spread.

Firstrust Savings Bank and First Citizens Bank originated the loans, all of which are in-school, and a vast majority of the loans in the pool, 82.0%, are fixed rate.

The securitization amount is smaller than an earlier transaction, and its AAA notes are expected to price at wider spreads than the AAA notes on the 2024-A series.

Note payments are linked to two tranched credit default swap (CDS) transactions, one related to the reference obligation between the issuer and SoFi Bank and SoFi Lending and the Issuer.

Broken down by product type, the agency's NJCLASS Standard Fixed product should account for a large majority of the loans, 75.4%. NJCLASS Consolidation will account for the next-largest group, 14.1%.

Most of the notes will be fixed rate, but the A1B tranche could be benchmarked to the three-month Secured Overnight Financing Rate (SOFR).