Missouri will raise $ 197 million ABS student loan



The portfolio of mostly consolidated, government-guaranteed student loans is provided by the Missouri Graduate Loans Authority, Series 2021-3, a trust that is expected to issue approximately $ 197.5 million in asset-backed securities (ABS).

The trust, known as MOHELA 2021-3, will issue fixed and floating rate bonds from a capital structure with three tranches or bond classes. The Pennsylvania Higher Education Support Agency will act as backup maintenance personnel, according to Kroll Bond.

Class A-1A bonds will pay fixed rate bonds, while A-1B and B bonds will pay floating interest rates based on monthly LIBOR plus margin to be determined during pricing.

According to KBRA, the trust will pay principal on a sequential and prorated basis, with classes A-1A, AB and class B receiving payments in that order until the respective classes are paid in full. With regard to interest, payments will be subject to interest payments on Class A notes. The final maturity of the bonds is August 25, 2061.

In addition to the subordination afforded to Class A notes by Class B notes, MOHELA 2021-3 has credit enhancements, including excess spread on bond subordination and over-collateralization (OC). There is also a capitalized interest fund and a reserve fund in the deal.

As of June 30, 2021, the statistical cut-off date for the inclusion of base loans in the collateral pool, consolidated loans accounted for 53.7% of the pool, of which 35.6% are unsubsidized and 18.1% are subsidized. Stafford loans account for 43.3% of the pool, while PLUS loans account for another 3.1% of loans. FFELP rehabilitated loans represent about 4.7% of the pool, according to KBRA.

Missouri-based students make up about 44.9% of borrowers, and the average balance of trust per borrower is $ 13,097, so any economic condition that negatively affects wealth could put a transaction at risk of higher defaults or abstinence.

The vast majority of borrowers, 73.9%, attended four-year schools, but other types of schools were well represented in the portfolio. Two-year and private schools accounted for 11.3% and 10.5% of schools, respectively.

KBRS plans to assign A-1A and A-1B bonds with an ‘AAA’ rating, totaling approximately $ 193 million each. The Class B bonds are expected to receive an ‘A’ rating.


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