SLM wanted to finance its long-dated (10 to 30 years) US government-guaranteed consolidation loan collateral in the securitisation market. Investor appetite for US student loan- backed securities is robust for average lives up to seven years, but becomes fragmented between seven and 10 years and is non-existent over 10 years. The solution was issuance of considerable foreign-denominated securities with average lives up to 12 years, introducing more than 100 new investors to SLM’s ongoing asset-backed securitisation (ABS) programme. For the first time, euro and sterling securities were issued as well as dollar tranches, utilising various types of structures.
This was the biggest student loan ABS transaction ever issued, giving non-dollar investors the opportunity to invest in US government-guaranteed student loans ABS, the safest and most stable asset class available. It was also the first SLM issuance to utilise a revolving period.
