Bangkok--23 Jan--Standard & Poor's
The U.S. student loan asset-backed securities (ABS) market continues to see steady growth. For the year ended Dec. 31, 2006, student loan ABS issuance increased to $78.69 billion from $69.7 billion in 2005. Positive demographic trends, strong enrollment, rising college costs, and growing alternative loan originations will continue to increase issuance volume in 2007, according to a recent report by Standard & Poor's Ratings Services.
"We expect volume to jump by 10% this year, which would be another record year," said credit analyst Christopher Conroy, a director in the Structured Finance group.
Some highlights of the student loan ABS market in 2006 could give us a preview of what's to come in 2007. In 2006, Citibank securitized its private-credit-based loans (CitiAssist), which it has been originating since 1997, for the first time. If it harbors regular issuance from Citibank, this transaction could signal that bank issuance will become a more regular feature of this market.
We can also expect to see more extendible-note programs and private-credit issuers. The first extendible-note program closed in August 2006. As expected, we've seen more interest in extendible notes from market participants, and in 2006, we saw three new private-credit issuers: Citibank, Educap, and Education Finance Partners. This suggests growing investor acceptance of these securities.
In addition, Standard & Poor's does not expect new Federal Family Education Loan Program guidelines to have an adverse effect on the credit quality of student loan ABS. "Since the passage of the new guidelines, issuance has continued to row. Therefore, as we expected, these changes do not appear to be a major issue for market participants," said Mr. Conroy.
The article, "SF Sector Report Card: Student Loan ABS Is Set To Score Record Growth," was published Jan. 22, 2007, on RatingsDirect.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Analyst Contact:
Christopher Conroy, New York (1) 212-438-2432
Media Contact:
Adam M. Tempkin, New York (1) 212-438-7530
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