Student Loan (NYSE:STU)
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5 Years : From May 2012 to May 2017
Student Loan Corp. (STU), a subsidiary of Citigroup Inc. (C) and an originator of student loans, sold $1.432 billion asset-backed securities on Friday.
Citi was the sole bookrunner on the deal.
In what has become a trend of Citi clearing out its books, and helping investors find a way to park their extra cash before year end, the bank has sold nearly $3 billion of asset-backed securities.
The student-loan backed deal is on top of the $1.5 billion credit-card backed deal that Citi sold on Thursday.
Both deals surprised market participants, who had expected all issuance to be done for the year. Other investors say that the deal was based on reverse inquiry to satisfy the requests of large buyers, similar to the credit-card issue that closed on Thursday.
Such deals offer investors an opportunity to put extra cash in portfolios to work, said Jim Harrington, a senior portfolio manager with Ryan Labs Asset Management.
The student loan deal was a single-tranche issue that sold at 75 basis points over three-month LIBOR rate. The deal is not eligible for cheap funding through the Federal Reserve's Term Asset-Backed Securities Loan Facility, or TALF.
The issue is backed by the Federal Family Education Loan Program, or FFELP consolidation loans, and is expected to settle Tuesday.
-By Prabha Natarajan, Dow Jones Newswires; 212-416-2468; email@example.com