Legal disputes weigh on NCSLT payoffs

Pic© L.Miguel Bugallo Sanchez

Category: ABS


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Ongoing legal disputes between several National Collegiate Student Loan Trust (NCSLT) transaction parties are credit negative for the affected private student loan ABS, due to the risk of servicing transfers and litigation expenses. Most senior tranches in the securitisations are expected to pay off, however.

The crux of the NCSLT disputes are misaligned interests of the securitisation residual interest holder and noteholders, which Moody's suggests is a product of poor transaction performance and the purchase of the residual interests by VCG Securities (the beneficial owner).

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