Discount ABS May Benefit From Student Defaults, Citigroup Says
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Discounted asset-backed securities tied to government-guaranteed student loans could benefit from defaults, according to Citigroup Inc.
Defaults trigger government prepayments of loans taken out through the Federal Family Education Loan Program and could increase if the economic situation remains uncertain, Citigroup analysts said in a report today. The acceleration of early payments will reduce the weighted average life of the debt.