Student Loan Corp's $1.432 Billion Asset-Backed Deal Sold
December 18 2009 - 1:59PM
Dow Jones News
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;
prabha.natarajan@dowjones.com
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