Student Loan ABS Market Thaw Could Revive Bank Portfolio Sales

Recent student loan securitizations suggest that the market is beginning to thaw, according to an American Banker article. Threats of steep downgrades over the past year have decreased investor demand for bonds backed by Federal Family Education Loan Program (“FFELP”) loans. Over the past two months, however, $1.597 billion of bonds backed by FFELP loans have been sold.

According to American Banker, Moody's and Fitch Ratings have yet to take any ratings actions on the securities under review; both are in the process of revising their criteria for rating FFELP bonds to account for the slower rate at which borrowers are repaying loans.

To read SFIG’s response to Moody’s revised criteria proposal, please see here. To read our response to Fitch’s revised criteria proposal, please see here.

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