So, how bad is the student debt market? Pretty bad.

Harvesters,

Over the past several weeks approximately $40B of federally-backed Student Loan Asset-Backed Securities ("SLABS") have been placed under review via the credit graders. Although an immaterial amount when compared to the massive $1.3T of total student debt outstanding, this case brings an interesting narrative to already opaque and controversial investment class.

Basically, it is becoming readily apparent that the likelihood of a full-repayment upon maturity is bleak at best. The lack of cash flow is largely due to the momentum in income-based repayment plans (a payment option on federal debt that allows borrowers to drop monthly payment down considerably). In this excerpt from our quarterly report, we'll take a quantitative look into this potential downgrade and try to get a glimpse of where this momentum will eventually lead us to.

As always, please feel free to contact me directly at taylor@pinecapitalpartners.com with any questions or concerns.

Thanks,
Taylor