The holder of federally guaranteed loans originated by the student finance business that’s officially named SLM Corp. (SLM) may sell the asset-backed securities as soon as tomorrow, according to a person familiar with the deal, who asked not to be identified, citing a lack of authorization to speak publicly. Royal Bank of Canada and Bank of America Corp. are arranging the transaction for the Newark, Delaware-based company.
Sallie Mae is remaking its business after legislation passed in 2010 cut private lenders out of the market for government-guaranteed debt. It’s splitting into two businesses, creating a separate company to originate private education debt.
The part of the company that is keeping the Sallie Mae name plans to originate $4 billion in new loans this year.
Sallie Mae sold $994 million of bonds tied to loans made under the defunct Federal Family Education Loan Program, or FFELP, in January, according to data compiled by Bloomberg. The company paid 38 basis points, or 0.38 percentage point, more than the one-month London interbank offered rate to issue top-rated debt maturing in 2.35 years, the data show.
Companies have sold $116 billion in asset-backed bonds linked to everything from auto loans to equipment leases this year, Bloomberg data show. Student-loan debt accounts for about $5 billion of the sales.
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