A portfolio of mostly consolidated and federally guaranteed student loans secures the Higher Education Loan Authority of the State of Missouri Series 2021-3, a trust that is expected to issue approximately $ 197.5 million in asset-backed securities (ABS).
Known as MOHELA 2021-3, the trust will issue a mix of fixed and floating rate notes from a three-tranche capital structure, or classes of notes. The Pennsylvania Higher Education Assistance Agency will act as a back-up service, according to the Kroll Bond rating agency.
Class A-1A Notes will pay on the Fixed Rate Notes, while Classes A-1B and B will pay a variable interest rate based on one-month LIBOR, plus a margin to be determined at the time of Fixing. price.
The trust will pay principal on a sequential and pro-rata basis, KBRA said, with classes A-1A, AB and B receiving payment in that order until the respective classes are fully paid. With respect to interest, payments will be subordinated to interest payments on Class A Notes. The Notes have a final maturity date of August 25, 2061.
In addition to the subordination granted to class A notes by class B notes, MOHELA 2021-3 has a credit enhancement, including the subordination of the notes and the excess overcollateralization (OC) margin. In addition, the agreement has a capitalized interest fund and a reserve fund.
As of June 30, 2021, the statistical deadline for the regrouping of the underlying loans in the guarantee pool, consolidated loans represented 53.7% of the pool, of which 35.6% unsubsidized and 18.1% subsidized. Stafford loans represent 43.3% of the pool and PLUS loans represent 3.1% of loans. Rehabilitated FFELP loans represent about 4.7% of the pool, KBRA said.
Students living in Missouri make up about 44.9% of borrowers, and the trust has an average balance per borrower of $ 13,097, so any economic condition that negatively affects the state could put the transaction at risk of default. or abstentions higher.
A large majority of borrowers, 73.9%, attended four-year schools, but other types of schools were well represented in the portfolio. Two-year schools and private schools accounted for 11.3% and 10.5% of school types, respectively.
KBRS plans to assign “AAA” ratings to Class A-1A and A-1B notes, each amounting to approximately $ 193 million. Class B tickets should be assigned a grade of “A”.