Vermont Private Student Loans Fuel $20.2M ABS

The Vermont Student Assistance Corp., 2022A, is set to issue $20.2 million in student loan revenue bonds in an effort to continue funding private fixed rate student loans.

The collateral pool includes tax-exempt fixed rate bonds, which will receive credit support ranging from 27.0% to 27.8% for the bonds, based on cash flow scenarios at ‘A’ balance from S&P Global Ratings, the rating agency said. in a pre-sale report.

Some 16,740 loans granted to 8,386 borrowers will guarantee the pool of guarantees. Borrowers have an average outstanding balance of $22,911, while loans have an outstanding balance of $11,477. The bonds will be collateralized on a parity basis with all previously issued senior bonds and any additional senior bonds to be issued in the future under the principal deed, the rating agency said.

The initial senior and subordinated bond parity on the deal ranges from approximately 131.3% to 119.9%, respectively, at closing. VSAC 2002A has a fully funded debt service reserve fund, which is equal to the greater of 2.0% of the principal balance of the bond, or $500,000.

The bonds benefit from excess cash, which the trust can release as long as the total parity is at least 125.0% and the senior parity is at least 130.0% immediately after release.

The rating agency said the fixed-rate nature of the loans should provide the bonds with positive excess margin through the bond’s expected interest rate and transaction costs.

The trust plans to originate approximately $25 million in new loans during the loan vesting and loan recycling periods, both of which end on June 15, 2023, using proceeds from the issuance of 2022A bonds and any remaining proceeds from the 2021A bond issue, according to S&P.

The rating agency plans to assign “A” ratings to all ratings, which have maturity dates ranging from June 15, 2028 to June 15, 2024.