Navient Corp., one of the biggest holders of student-loan securities, has been pressured by bondholders to support older bond issues possibly affected by slowing repayment speeds.
The company has bought out $1.1 billion of loans this year from bond deals already issued, Navient’s Chief Financial Officer Somsak Chivavibul said on an Oct. 21 conference call. The problem is deterring Navient from issuing new FFELP securitizations, Chief Executive Officer Jack Remondi said.
Navient spokeswoman Patricia Nash Christel didn’t immediately return calls seeking further comment.
While the bond market is being riled by the prospect of downgrades, students unable to afford their loans are getting extensions or relying on government programs that allow them to make smaller payments. A push by the Obama administration to provide debt relief for student borrowers has expanded use of those options.
A more recent initiative by the Obama administration may entice borrowers to prepay their loans and consolidate debt, lessening the risks of maturity defaults, Fitch said Nov. 9.