Sallie Mae Plans to Issue $760.4 Million of Bonds Backed by Student Loans

SLM Corp., the largest U.S. student lender, plans to sell $760.4 million of bonds backed by loans, according to a person familiar with the offering.

The loans, originated through the Federal Family Education Loan Program, carry a government guarantee, said the person, who declined to be identified because terms aren’t public. Bank of America Corp. is managing the sale by the Reston, Virginia-based lender also known as Sallie Mae.

Debt tied to household borrowing, including auto and education loans, and credit card debt, is benefiting from limited issuance. This year’s sales of securities backed by consumer and business loans are at $63.8 billion, compared with $115.8 billion in the similar period in 2009, according to Bank of America data.

Other companies marketing asset-backed debt include the finance arms of Banco Santander SA, Hyundai Motor Co. and Ally Financial Inc. Asset-backed securities tied to auto lending account for 62 percent of issuance this year, Bank of America data show.

Top rated securities backed by debt on cars yield about 62 basis points more than similar-maturity U.S. Treasuries, compared with 81 basis points on Dec. 31, according to Bank of America Merrill Lynch index data.

BLOOMBERG