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[sludgehound]

some $37B Fed student loans at risk default

17:22 EDT - Bonds backed by federal student loans totaling some $37B are at an increased risk of default, with a possible impact on the servicers that issued these securitizations, according to Moody's . The bonds in question were issued mostly by Nelnet (NNI) and SLM, though Navient (NAVI), which spun off of SLM last year, is currently servicing those bonds, according to Moody's . Navient and Nelnet are among the largest student loan servicers. The heightened default risk is due to a large number of borrowers who are in federal repayment plans in which they're making little to no payments. The ratings firm "projects the bonds will not be paid down by maturity," which would be an event of default for the trusts, says Debashish Chatterjee , managing director for ABS surveillance. Moody's says there's limited risk to the two companies but points out Navient has a sizable $8.8B of debt maturing over the next four years. Bondholders should be made whole in the long run, Chatterjee says, since the loans are federally guaranteed. (annamaria.andriotis@ wsj.com)

(END) Dow Jones Newswires
08-19-15 1722ET
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