Iowa Student Loan Liquidity offers $155.7 million in revenue bonds

A pool of higher education loans, the vast majority of which have either been refinanced or extended to students with greater financing needs, secures the Iowa Student Loan Liquidity Corp. Series 2022A and 2022B and will raise 155 $.7 million in capital markets.

The trust will issue taxable and tax-exempt bonds through Series 2022A and 2022B, respectively, according to S&P Global Ratings, which plans to assign ratings.

The bonds will be issued through a senior-subordinated structure. The senior and subordinated bond parities are expected to be 139.4% and 123.7% respectively, S&P said.

The revenue bonds will benefit from a reserve account equal to 2.0% of the original balance of the bonds at closing, and the issuing entity, Iowa Student Loan Liquidity Corp., must maintain the reserve account at 2.0% of the current bond balance, according to S&P.

RBC Capital Markets is the underwriter of the agreement, which will limit broadcasts before June 1, 2023. After that date, broadcasts are permitted, provided that:

  • the parity is at least 120.0%
  • accrued assets exceed accrued liabilities by at least $1.2 million and
  • the current bond balance is not less than 10% of the initial aggregate bond balance at closing

S&P says that in a moderate stress scenario, or “BBB” stress scenario, it expects ratings to remain within one category of its preliminary “AA” rating during the first year.
Reset Refinance Loans represent 54.8% of the pool, while the Partnership Education Loan Program represents 27.3%, totaling 82.1% of the pool. Other parts of the pool include prior private lending programs and 8.1%, and refi medical residency reset, at 9.8%, according to the rating agency.

Most loans, 66.1%, have a co-signer. Collateral pool loans have varying repayment statuses, with repayment being the largest, at 67.0%, followed by deferral, at 16.2%, and residency, at 9.7%, S&P said. .

S&P plans to assign “AA” ratings to all classes of notes, with scheduled maturity dates ranging from December 1, 2023 to December 1, 2032.

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