Market Overview

KBRA Releases a Primer on the Refi Student Loan ABS Market

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Kroll Bond Rating Agency (KBRA) releases a refi student loan ABS primer
entitled "An Education on Refi Student Loans ABS." The report makes the
following key points:

  • 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.
  • 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 here.

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.

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