| [August 14, 2018] |
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KBRA Releases a Primer on the Refi Student Loan ABS Market
Kroll Bond Rating Agency (KBRA) releases a refi student loan ABS (News - Alert) primer
entitled "An Education on Refi Student Loans ABS." The report makes the
following key points:
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Refi student loan lenders have increased their activity in the ABS
primary market, issuing $5.2 billion of bonds in 2017, up 34% YoY.
Refi SLABS now account for over one-third of all student loan
issuance, with over $10.5 billion in outstanding paper.
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A typical refi borrower is of very high credit quality. They are
mostly prime borrowers with high incomes, ample free cashflow, and an
undergraduate or advanced degree in law, medicine, or business.
-
Not surprisingly, refi student loan securitizations have exhibited
strong credit performance to-date, with just a handful of loans being
charged-off, mainly attributed to catastrophic life events, such as
death or disability of the borrower.
-
With losses at very low levels, prepayment rates have been the primary
focus for investors. Over the past few years, refi SLABS have exhibit
increasing CPRs as they age.
-
Despite the outperformance of refi SLABS since early 2016, the asset
class still compare favorably with other consumer ABS sectors (Figure
13). For example, when adjusting for the term premium, refi SLABS
offer around a 20bp pickup versus subprime auto ABS and a 30bp pickup
versus prime autos and bank cards.
To view the report, click hee.
Related Publications: (available at www.kbra.com)
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About KBRA and KBRA Europe
KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180814005590/en/
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