Student loan ABS

Evan as the broader securitization market takes a breather, unusual deals from off-the-run asset classes continue provide diversification – and the opportunity to pick up yield.

Just 66% of the collateral Navient Private Education Refi Loan Trust 2018-C consists of loans to borrowers with graduate, medical, law or other advanced degrees, down from 72% in a similar transaction in February.

Private student loans made before the financial crisis were once considered a toxic asset. A recent $414 million securitization by FirstKey, an affiliate of Cerberus Capital Management, shows how much things have changed.

That's a departure from the state student loan authority's previous offering, completed in 2017, which was backed by a mix of private and federally guaranteed student loans, and was rated one notch lower by S&P Global Ratings.

The $35 million offering of fixed-rate bonds comes from a new mater trust and will be taxable; previously, the state student loan authority has funded refinance loans with the same tax-free bonds used to fund in-school lending.

Just 16% of the collateral for the $522 million Nelnet Student Loan Trust 2018-2 consist of “rehabbed” Federal Family Education Loan Program loans.

Qualifying borrowers have their maximum monthly payment reduced to 15% of the total of the household income, but the maximum dollar amount that can be extended is capped at $4 million.

The Tennessee community bank garnered a triple-A from two credit rating agencies for its inaugural securitization this month of loans refinancing the debt of borrowers with advanced degrees and high-paying jobs.

Proceeds from the $75 million issuance, the 10th from a master trust created in 2009, will fund new loans and repay the remaining outstanding notes issued from a 2008 master trust.

Southeast Bank's Education Loan Finance division joins SoFi, Navient and Laurel Road in originating and securitizing the refinanced student loans of advanced-degree professionals.