$40,694,000* IOWA STUDENT LOAN LIQUIDITY CORPORATION

Transcription

1 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be an sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED APRIL 24, 2015 NEW ISSUE BOOK-ENTRY ONLY Expected Ratings: S&P: A(sf) Fitch: Asf See RATINGS herein In the opinion of Bond Counsel, interest on the Series 2015-A Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2015-A Bonds, assuming the accuracy of the certifications of the Corporation and continuing compliance by the Corporation with the requirements of the Internal Revenue Code of 1986, as amended. Interest on the Series 2015-A Bonds is a tax preference item that is subject to individual and corporate federal alternative minimum tax. Bond Counsel is also of the opinion that interest on the Series 2015-A Bonds is not excluded from income for State of Iowa income tax purposes. See TAX MATTERS herein. $40,694,000* IOWA STUDENT LOAN LIQUIDITY CORPORATION (An Iowa corporation organized pursuant to the nonprofit laws of the State of Iowa) Student Loan Revenue Bonds, Senior Series 2015-A (AMT) Dated: Date of Delivery Due: December 1, as shown on the inside front cover The Iowa Student Loan Liquidity Corporation s Student Loan Revenue Bonds, Senior Series 2015-A (the Series 2015-A Bonds ), when issued, will be issued as registered bonds and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Series 2015-A Bonds. Individual purchases may be made in book-entry-only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the Series 2015-A Bonds purchased. So long as DTC is the registered owner of the Series 2015-A Bonds, payments of the principal of, redemption premium, if any, and interest on the Series 2015-A Bonds will be made directly to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants and Indirect Participants. See THE SERIES 2015-A BONDS Book-Entry-Only System herein. Wells Fargo Bank, National Association will act as trustee (the Trustee ), paying agent and bond registrar for the Series 2015-A Bonds. The Series 2015-A Bonds will be dated the date of delivery thereof and will mature on December 1 in the years and in the principal amounts set forth on the inside front cover hereof. The Series 2015-A Bonds will bear interest at the rates per annum set forth on the inside front cover, payable December 1, 2015* and semiannually thereafter on each June 1 and December 1. The Series 2015-A Bonds are the initial Series of Bonds being issued pursuant to the Trust Indenture, dated as of May 1, 2015 (the General Indenture ), as amended and supplemented by a First Supplemental Trust Indenture, dated as of May 1, 2015 (the First Supplemental Trust Indenture ), between the Iowa Student Loan Liquidity Corporation (the Corporation ) and the Trustee. The General Indenture, as amended and supplemented (including by the First Supplemental Trust Indenture), is herein referred to as the Indenture. The Series 2015-A Bonds are being issued by the Corporation to (i) provide moneys to finance Eligible Loans, (ii) fund the Reserve Fund, (iii) make an initial deposit to the Capitalized Interest Fund, and (iv) pay certain costs related to the issuance of the Series 2015-A Bonds. Pursuant to the Indenture, the Series 2015-A Bonds are secured by a pledge of and security interest in a portion of the proceeds of the sale of the Series 2015-A Bonds (until expended for the purposes for which the Series 2015-A Bonds were issued), the Eligible Loans Financed under the Indenture, all Revenues, the moneys and securities held in certain Funds established under the Indenture and certain other assets constituting the Trust Estate in each case subject to the provisions of the Indenture. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS General herein. Upon the satisfaction of certain conditions, additional Bonds may be issued under the Indenture and Other Obligations may be entered into from time to time on a parity basis with the Series 2015-A Bonds or on a basis subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Series of Bonds; Priority herein. The Series 2015-A Bonds are subject to redemption prior to maturity. See THE SERIES 2015-A BONDS Redemption Provisions herein. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Series 2015-A Bonds. Attention should be given to certain investment considerations described in this Official Statement which could affect the ability of the Corporation to pay Debt Service on the Series 2015-A Bonds and which could have an effect on the market price of the Series 2015-A Bonds to an extent that cannot be determined. See CERTAIN RISK FACTORS herein. THE SERIES 2015-A BONDS ARE LIMITED OBLIGATIONS OF THE CORPORATION AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF. THE CORPORATION HAS NO TAXING POWER. The Series 2015-A Bonds will be offered, subject to prior sale, when, as and if issued by the Corporation and accepted by the Underwriter, and are subject to the final approving opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, Bond Counsel, and certain other conditions described herein. Certain additional legal matters will be passed upon for the Corporation by its corporate counsel, Ahlers & Cooney, P.C., Des Moines, Iowa, and for the Underwriter by Dorsey & Whitney LLP, Des Moines, Iowa. It is expected that the Series 2015-A Bonds will be available for delivery through the facilities of DTC in New York, New York on or about May 13, * Morgan Stanley May, 2015 * Preliminary, subject to change.

2 $40,694,000 * IOWA STUDENT LOAN LIQUIDITY CORPORATION STUDENT LOAN REVENUE BONDS, SENIOR SERIES 2015-A (AMT) MATURITY SCHEDULE * Maturity Date (December 1) Serial Bonds Principal Amount Interest Rate Price Yield CUSIP 1 $ * % Term Bond due December 1, 20, priced to yield % CUSIP Number 1 * Preliminary, subject to change. 1 CUSIP data herein are provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of Bondowners only at the time of issuance of the Series 2015-A Bonds and the Corporation does not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2015-A Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2015-A Bonds.

3 Information set forth herein has been furnished by the Iowa Student Loan Liquidity Corporation (the Corporation ) and other sources that are believed to be reliable. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above or that the other information or opinions are correct as of any time subsequent to the date hereof. References in this Official Statement to the Indenture (as hereinafter defined) do not purport to be complete and potential purchasers are referred to the Indenture for full and complete details of the provisions thereof. No dealer, broker, salesperson or other person has been authorized by the Corporation to give any information or to make any representations with respect to the Series 2015-A Bonds, other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2015-A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The Underwriter listed on the front cover of this Official Statement (the Underwriter ) has provided the following statement for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applicable to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information in this Official Statement concerning The Depository Trust Company, New York, New York ( DTC ) and DTC s book-entry-only system has been obtained from DTC. None of the Corporation, any of its advisors or the Underwriter has independently verified, makes any representation regarding or accepts any responsibility for the accuracy, completeness or adequacy of such information. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES ATTACHED HERETO, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES ATTACHED HERETO, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE SERIES 2015-A BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. IN CONNECTION WITH THE OFFERING OF THE SERIES 2015-A BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015-A BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

4 Upon issuance, the Series 2015-A Bonds will not be registered under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities exchange, nor has the Indenture been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon certain exemptions contained in such federal laws. In making an investment decision, investors must rely upon their own examination of the Series 2015-A Bonds and the security therefor, including an analysis of the risks involved. The Series 2015-A Bonds have not been recommended by any federal or state securities commission or regulatory authority. The registration, qualification or exemption of the Series 2015-A Bonds in accordance with applicable provisions of securities laws of the various jurisdictions in which the Series 2015-A Bonds have been registered, qualified or exempted cannot be regarded as a recommendation thereof. Neither such jurisdictions nor any of their agencies have passed upon the merits of the Series 2015-A Bonds or the adequacy, accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. Neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity has passed upon the accuracy or adequacy of this Official Statement or approved the Series 2015-A Bonds for sale. There follows in this Official Statement certain information concerning the Corporation, together with descriptions of the terms of the Indenture, the Series 2015-A Bonds, the Backup Servicing Agreement, certain other documents related to the security for the Series 2015-A Bonds and certain applicable laws. All references herein to laws and documents are qualified in their entirety by reference to such laws, as in effect, and to each such document as such document has been or will be executed and delivered on or prior to the date of issuance of the Series 2015-A Bonds, and all references to the Series 2015-A Bonds are qualified in their entirety by reference to the definitive form thereof and the information with respect thereto contained in the Indenture. This Official Statement is submitted in connection with the sale of the Series 2015-A Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstance, create any implication that there has been no change in the affairs of the Corporation since the date hereof. FORWARD-LOOKING STATEMENTS This Official Statement, including APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto, contains statements which should be considered forward-looking statements, meaning they refer to possible future events or conditions. Such statements are generally identifiable by the words such as plan, expect, estimate, budget or similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Corporation does not expect or intend to issue any updates or revisions to those forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur, or fail to occur.

5 TABLE OF CONTENTS Page SUMMARY STATEMENT... i INTRODUCTION...1 PURPOSE OF THE SERIES 2015-A BONDS...3 SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS...4 General...4 Reserve Fund...4 Capitalized Interest Fund...5 Additional Series of Bonds; Priority...5 Overcollateralization and Initial Parity Percentage...6 Program Expenses, Servicing Fees and Trustee Fees...6 Rating Agency Notification...6 Certain Risk Factors...7 THE SERIES 2015-A BONDS...7 General Terms of the Series 2015-A Bonds...7 Redemption Provisions...8 Book-Entry Only System...11 CERTAIN RISK FACTORS...14 THE CORPORATION...30 General...30 Board of Directors...30 Corporate Administration...31 Outstanding Indebtedness of the Corporation...33 Financial and Other Information...34 ESTIMATED SOURCES AND USES OF PROCEEDS...35 THE FINANCED LOANS...35 The FFELP Loans...36 The Private Loans...45 Borrower Benefits...53 THE CORPORATION S FEDERAL LOAN PROGRAMS...53 FFELP Program...53 DESCRIPTION OF THE GUARANTY AGENCIES...54 General...54 Great Lakes Higher Education Guaranty Corporation...55 Pennsylvania Higher Education Assistance Agency...57 THE CORPORATION S PRIVATE LOAN PROGRAMS...59 General...59 Private Loan Program Loan Statistics...81 SERVICING OF THE FINANCED LOANS...86 Financed FFELP Loans...86 Servicing of Financed Loans...87 Backup Servicer and Backup Servicing Agreement...88 LEGALITY FOR INVESTMENT AND DEPOSIT...91

6 TAX MATTERS...91 ABSENCE OF CERTAIN LITIGATION...94 LEGALITY...94 UNDERWRITING...94 RATINGS...95 MUNICIPAL ADVISOR...96 CONTINUING DISCLOSURE...96 MISCELLANEOUS...96 APPENDIX A: SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B: FORM OF OPINION OF BOND COUNSEL APPENDIX C: FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX D: FINANCIAL STATEMENTS OF THE CORPORATION

7 SUMMARY STATEMENT This Summary Statement is subject in all respects to more complete information contained in this Official Statement and no conclusion should be drawn from the order of material or information presented in this Official Statement. The offering of the Iowa Student Loan Liquidity Corporation s Student Loan Revenue Bonds, Senior Series 2015-A (the Series 2015-A Bonds ) to potential investors is made only by means of this entire Official Statement. The Series 2015-A Bonds, together with any other bonds hereafter issued under the Indenture, are herein referred to as the Bonds. No person is authorized to detach this Summary Statement from this Official Statement or to otherwise use it without this entire Official Statement. All terms capitalized, but not defined, in this Summary Statement shall have the meaning set forth elsewhere in this Official Statement. The Corporation Iowa Student Loan Liquidity Corporation (the Corporation ) is a private nonprofit corporation incorporated on August 17, 1979, authorized under the Code of Iowa and the Iowa Partnership Loan Program Agreement, dated May 19, 1992, between the Corporation and the Iowa College Student Aid Commission, an Iowa state agency, to provide an alternative educational loan program. Pursuant to such authority, the Corporation established its Iowa Partnership Loan Program. In addition, the Corporation launched its Medical Loan Program to assist students in health related fields, its National Alternative Loan Program for students outside the State of Iowa, and its Canadian Alternative Loan Program to assist Canadian students attending Iowa colleges. The Iowa Partnership Loan Program, the Medical Loan Program, the National Alternative Loan Program and the Canadian Alternative Loan Program are collectively referred to herein as the Private Loan Programs. Educational loans made under the Private Loan Programs are to be financed pursuant to certain underwriting or credit criteria and are to bear interest at rates determined by the Corporation. See THE CORPORATION S FEDERAL LOAN PROGRAMS and THE CORPORATION S PRIVATE LOAN PROGRAMS herein. Financing of Eligible Loans The Indenture permits the financing only of Eligible Loans from moneys in the Student Loan Fund established pursuant to the Indenture. The Eligible Loans expected to be Financed under the Indenture consist of FFELP Loans and other private loans to borrowers for post-secondary education authorized to be originated or purchased by the Corporation pursuant to the Private Loan Programs; provided that, upon a Rating Agency Notification, loans originated under other private loan programs may also constitute Eligible Loans. Notwithstanding the foregoing, the First Supplemental Trust Indenture prescribes that Eligible Loans that may be Financed with proceeds of the Series 2015-A Bonds, or any other moneys in the Accounts and Subaccounts established pursuant to the First Supplemental Trust Indenture, consist of FFELP Loans and Private Loans, unless there has been a Rating Agency Notification with respect to other types of Eligible Loans. See THE CORPORATION S FEDERAL LOAN PROGRAMS and THE CORPORATION S PRIVATE LOAN PROGRAMS herein for a further description of the Corporation s loan programs. See, also, ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. i

8 On the Closing Date, the Corporation will cause $12,000,000 * of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate Eligible Loans during the Acquisition Period (the Prefunded Loans ). Also on the Closing Date, the Corporation will contribute $34,802,953 of Eligible Loans (the Contributed Loans and, together with the Prefunded Loans, the Series 2015-A Loans ) to the 2015-A Account of the Student Loan Fund, which Contributed Loans shall be part of the Trust Estate under the Indenture. The Series 2015-A Loans, together with all other Eligible Loans financed with proceeds of other Bonds issued under the Indenture or certain other available moneys under the Indenture, are referred to herein, collectively, as the Financed Loans. See ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS. No more than $7,800,000 * (or such greater amount as to which a Rating Agency Notification has been given), of the Prefunded Loans may have deferred principal and interest payments while the student is attending school. No more than $5,400,000 * (or such greater amount as to which a Rating Agency Notification has been given) of the Prefunded Loans may be to borrowers that have FICO scores in the 670 to 759 category. The Series 2015-A Bonds The Series 2015-A Bonds is the first Series of Bonds being issued under the Trust Indenture, dated as of May 1, 2015 (the General Indenture ), as amended and supplemented by a First Supplemental Trust Indenture, dated as of May 1, 2015 (the First Supplemental Trust Indenture ), between the Corporation and Wells Fargo Bank, National Association, as trustee (the Trustee ), paying agent and bond registrar. The General Indenture, as amended and supplemented (including by the First Supplemental Trust Indenture), is herein referred to as the Indenture. The Series 2015-A Bonds constitute Senior Bonds under the Indenture and will be on a parity with any other Series of Senior Bonds issued under the Indenture. The Series 2015-A Bonds will mature on the dates and in the principal amounts and bear interest at the rates set forth on the inside front cover hereof. The Series 2015-A Bonds are being issued by the Corporation to (i) provide the Corporation with moneys to finance Eligible Loans, (ii) fund the Reserve Fund, (iii) make an initial deposit to the Capitalized Interest Fund, and (iv) pay certain costs related to the issuance of the Series 2015-A Bonds. The Corporation may hereafter issue Senior Bonds under the Indenture on a parity with the Series 2015-A Bonds, and may issue Bonds under the Indenture payable on a basis subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Series of Bonds; Priority herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto. Preliminary, subject to change ii

9 Sources of Payment and Security for the Series 2015-A Bonds The Series 2015-A Bonds are limited obligations of the Corporation, secured by and payable solely from: (i) a portion of the proceeds derived from the sale of the Series 2015-A Bonds (until expended for the purposes for which the Series 2015-A Bonds were issued); (ii) Financed Loans; (iii) all Revenues (including, without limitation, payments of principal of and interest on Financed Loans); (iv) the moneys and securities in certain Funds established under the Indenture; and (v) certain other assets pledged under the Indenture (collectively, the Trust Estate ). See ESTIMATED SOURCES AND USES OF PROCEEDS herein. The Trust Estate will include the Series 2015-A Loans, together with all other Eligible Loans financed with proceeds of other Bonds issued under the Indenture or certain other available moneys under the Indenture. Upon the satisfaction of certain conditions, additional Bonds may be issued under the Indenture and Other Obligations may be entered into from time to time on a parity basis with the Series 2015-A Bonds or on a basis subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Bonds; Priority herein. Redemption The Series 2015-A Bonds are subject to mandatory non-origination redemption, optional redemption, cumulative mandatory sinking fund redemption, and special optional and special mandatory redemption from Excess Revenue. See THE SERIES 2015-A BONDS Redemption Provisions herein. Release of Revenues to Corporation. Pursuant to the terms of the Indenture, and to the extent the Corporation elects not to exercise its right to Special Optional Redemption from Excess Revenue, on each Interest Payment Date, after taking into account certain payments required under the Indenture, the Revenues maybe released to the Corporation free and clear of the lien and pledge of the Indenture if, as certified in a Corporation Certificate, the Parity Percentage exceeds * %, in such amount as set forth in the Corporation s order and to the extent that the payment of such amount would not cause the Parity Percentage to fall below such percentage, or such lower percentage for which a Rating Agency Notification has been given. Origination of Financed Loans On the Closing Date, the Corporation will cause $12,000,000 * of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate Eligible Loans during the Acquisition Period. Also on the Closing Date, the Corporation will contribute $34,802,953 of Eligible Loans to the 2015-A Account of the Student Loan Fund, which Contributed Loans, together with the Prefunded Loans, as originated and acquired, shall be part of the Trust Estate under the Indenture. See ESTIMATED SOURCES AND USES OF PROCEEDS herein. Preliminary, subject to change iii

10 With respect to the proceeds of the Series 2015-A Bonds deposited into the 2015-A Subaccount of the Acquisition Account, the Acquisition Period begins on the Closing Date and ends on July 1, 2016 *, provided this period may be extended upon a Rating Agency Notification with respect to such extension. If uncommitted proceeds remain in the 2015-A Subaccount of the Acquisition Account at the expiration of the Acquisition Period (as the same may have been extended), such amounts are required to be used to redeem Series 2015-A Bonds. See THE SERIES 2015-A BONDS Redemption Provisions herein. No more than $7,800,000 * (or such greater amount as to which a Rating Agency Notification has been given), of the Prefunded Loans may have deferred principal and interest payments while the student is attending school. No more than $5,400,000 * (or such greater amount as to which a Rating Agency Notification has been given) of the Prefunded Loans may be to borrowers that have FICO scores in the 670 to 759 category. Overcollateralization and Initial Parity Percentage Upon the issuance of the Series 2015-A Bonds, the initial Parity Percentage will be at least * %, which reflects (1) the receipt of proceeds of the Series 2015-A Bonds (net of the portion thereof in the approximate amount of $ to be transferred immediately to the Corporation outside of the Indenture, and any proceeds to be used to pay costs of issuance of the Series 2015-A Bonds), (2) the receipt by the Trustee of the Contributed Loans from the Corporation on the Closing Date, and (3) the reduction in the value of such Eligible Loans by accrued Excess Earnings associated therewith. See ESTIMATED SOURCES AND USES OF PROCEEDS and SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Overcollateralization and Initial Parity Percentage herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Revenue Fund attached hereto. Ratings Prior to the issuance and delivery of the Series 2015-A Bonds, Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc. ( S&P ), and Fitch, Inc. ( Fitch ) are expected to assign their bond rating of A(sf) and Asf, respectively, to the Series 2015-A Bonds. See RATINGS herein. Rating Agency Notification The Indenture provides that the Rating Agencies have various notice rights and further requires as a condition of certain actions, inactions or other events that there be a Rating Agency Notification, including, but not limited to, issuance of Additional Bonds; determinations of the types of Private Loans to be included as Eligible Loans in the future; entry into Derivative Product Agreements; changes in the Servicer or Backup Servicer; changes in the amount and timing of Program Expenses, the Servicing Fees and the Trustee Fees; changes in the Reserve Fund Requirement; types of Investment Securities; certain amendments or supplements to the Indenture; substitution or replacement of the Trustee; establishment of, and changes in, the Parity Percentage with respect to the release of moneys from the Trust Estate; and extension of the Acquisition Period. The Indenture also requires that the Corporation make any Rating Agency Notification publicly available in the manner applicable to post-issuance disclosures under Rule iv

11 15c2-12. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Rating Agency Notification and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Certain Risk Factors Attention should be given to certain investment considerations described in this Official Statement which could affect the ability of the Corporation to pay Debt Service on the Series 2015-A Bonds and which could have an effect on the market price of the Series 2015-A Bonds to an extent that cannot be determined. See CERTAIN RISK FACTORS herein. An investment in the Series 2015-A Bonds involves an element of risk. Each prospective purchaser of Series 2015-A Bonds should read this entire Official Statement, including the front cover page and Appendices attached hereto, in order to make a judgment as to whether the Series 2015-A Bonds are an appropriate investment. Backup Servicer The Corporation has entered into an agreement with the Pennsylvania Higher Education Assistance Agency ( PHEAA ) pursuant to which PHEAA has agreed to act as a backup servicer with respect to the Financed Loans. In such role, PHEAA will act as successor Servicer with respect to the Financed Loans serviced by the Corporation upon the occurrence of certain events described herein under SERVICING OF THE FINANCED LOANS Backup Servicer and Backup Servicing Agreement. [Remainder of Page Intentionally Left Blank] v

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13 OFFICIAL STATEMENT Relating to IOWA STUDENT LOAN LIQUIDITY CORPORATION $40,694,000 * Student Loan Revenue Bonds, Senior Series 2015-A INTRODUCTION This Official Statement, including the front cover page and inside front cover page hereof, the Summary Statement and the Appendices attached hereto, sets forth information regarding the issuance by the Iowa Student Loan Liquidity Corporation (the Corporation ) of its Student Loan Revenue Bonds, Senior Series 2015-A (the Series 2015-A Bonds ). The Series 2015-A Bonds, together with any other bonds hereafter issued under the Indenture, are herein referred to as the Bonds. Terms capitalized in the body of this Official Statement and not otherwise defined therein shall have the meaning set forth in APPENDIX A attached hereto. The Corporation is an Iowa private nonprofit corporation, was incorporated on August 17, 1979, for the purpose of providing a statewide student loan program through which the Corporation could finance student loan notes originated under the Higher Education Act of 1965, as amended (the Higher Education Act ). Pursuant to State of Iowa (the State ) legislation enacted in 1992, and the Iowa Partnership Loan Program Agreement, dated May 19, 1992, as amended to the date hereof (the Iowa Partnership Loan Program Agreement ), between the Corporation and the Iowa College Student Aid Commission, the Corporation is also authorized to finance private education loans other than those originated under the Higher Education Act, and in accordance with such legislation and the Iowa Partnership Loan Program Agreement, corresponding changes have been made to the Corporation s articles of incorporation and bylaws. The Corporation has the ability to make further amendments to its articles of incorporation and bylaws without State legislative action to enable the Corporation to finance other undertakings. However, the Indenture does not provide that the proceeds of Series 2015-A Bonds could be used to finance undertakings other than the purchase and origination of Eligible Loans. There is no limitation in any State law or in the articles of incorporation or bylaws of the Corporation as to the aggregate amount of debt which the Corporation may incur. In reliance on the foregoing State legislative authority, the Corporation has established its Iowa Partnership Loan Program, Medical Loan Program, National Alternative Loan Program and Canadian Alternative Loan Program (collectively, the Private Loan Programs ). See THE CORPORATION S PRIVATE LOAN PROGRAMS herein. In order to finance educational loans made under its Private Loan Programs, the Corporation is authorized to borrow money and to issue bonds payable from specified sources, including the revenues derived from such loans. The Series 2015-A Bonds are being issued under a Trust Indenture, dated as of May 1, 2015 (the General Indenture ), as amended and supplemented by a First Supplemental Trust * Preliminary, subject to change. 1

14 Indenture, dated as of May 1, 2015 (the First Supplemental Trust Indenture ), between the Corporation and Wells Fargo Bank, National Association, as trustee (the Trustee ), registrar (the Registrar ) and paying agent (the Paying Agent ). The General Indenture, as amended and supplemented (including by the First Supplemental Trust Indenture), is herein referred to as the Indenture. The Series 2015-A Bonds constitute Senior Bonds under the Indenture. The Indenture permits the financing only of Eligible Loans from moneys in the Student Loan Fund established under the Indenture. The Eligible Loans expected to be Financed under the Indenture consist of FFELP Loans and other loans to borrowers for post-secondary education authorized, originated or purchased by the Corporation pursuant to the Higher Education Act and the Private Loan Programs; provided that, upon a Rating Agency Notification, loans originated under other private loan programs may also constitute Eligible Loans. See THE CORPORATION S PRIVATE LOAN PROGRAMS herein for a further description of the Private Loan Programs. See, also, ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. On the Closing Date, the Corporation will cause $12,000,000 * of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate Eligible Loans during the Acquisition Period (the Prefunded Loans ). Also on the Closing Date, the Corporation will contribute $34,802,953 of Eligible Loans (the Contributed Loans and, together with the Prefunded Loans, the Series 2015-A Loans ) to the 2015-A Account of the Student Loan Fund, which Contributed Loans shall be part of the Trust Estate under the Indenture. The Series 2015-A Loans, together with all other Eligible Loans financed with proceeds of other Bonds issued under the Indenture or certain other available moneys under the Indenture, are referred to herein, collectively, as the Financed Loans. See ESTIMATED SOURCES AND USES OF PROCEEDS, and THE FINANCED LOANS. No more than $7,800,000 * (or such greater amount as to which a Rating Agency Notification has been given), of the Prefunded Loans may have deferred principal and interest payments while the student is attending school. No more than $5,400,000 * (or such greater amount as to which a Rating Agency Notification has been given) of the Prefunded Loans may be to borrowers that have FICO scores in the 670 to 759 category. The Series 2015-A Bonds are being issued as fixed rate bonds and will bear interest at the rates shown on the inside front cover page hereof. The Series 2015-A Bonds are secured by and payable solely from payments, proceeds, charges and other income received by the Corporation from or on account of the Financed Loans, from amounts payable under any Derivative Product Agreements (to the extent in excess of amounts payable to the Derivative Product Counterparty thereunder (excluding, in any event, Replacement Counterparty Upfront Payments)) and from amounts on deposit in certain Funds established in the Indenture, subject to the provisions of the Indenture permitting the application or exercise thereof for or to the purposes and on the terms and conditions set forth therein, including the payment of Program Expenses, Servicing Fees and Trustee Fees as described in Preliminary, subject to change 2

15 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto, under the headings TERMS OF BONDS Limited Obligation and PLEDGE OF INDENTURE; FUNDS. Such income includes, without limitation, payments of interest on such Financed Loans (whether regularly scheduled, delinquent or advance) and income on investments and principal payments on such Financed Loans (whether regularly scheduled, delinquent or advance). Bonds other than the Series 2015-A Bonds ( Additional Bonds ) may be issued under the Indenture, and Derivative Product Agreements may be entered into by the Corporation, upon satisfaction of certain conditions specified in the Indenture. Such Bonds and the Corporation s obligations under any such Derivative Product Agreement may be payable and secured on a parity with or subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Series of Bonds; Priority; Subordinated Bonds herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto under the headings TERMS OF BONDS Limited Obligation and PLEDGE OF INDENTURE; FUNDS. THE SERIES 2015-A BONDS ARE LIMITED OBLIGATIONS OF THE CORPORATION AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF. THE CORPORATION HAS NO TAXING POWER. There can be no assurance that relevant State or federal laws will not be changed in a manner which might adversely affect the availability and flow of funds of the Corporation. There can be no assurances that any future law will not prospectively or retroactively affect the terms and conditions under which Eligible Loans are made in a manner that might adversely affect the ability of the Corporation to pay the principal of and interest on the Series 2015-A Bonds when due. See CERTAIN RISK FACTORS herein. The descriptions of the Series 2015-A Bonds, the documents authorizing and securing the Series 2015-A Bonds, and the pertinent State legislation and Corporation administrative rules contained herein do not purport to be comprehensive or definitive. All references herein to such documents or legislation and rules are qualified in their entirety by reference to such documents or legislation and rules. A reasonable number of copies of certain of such documents may be obtained from the Iowa Student Loan Liquidity Corporation, 6775 Vista Drive, West Des Moines, Iowa 50266, Attention: Executive Vice President and Treasurer, or from the Trustee, Wells Fargo Bank, National Association, 625 Marquette Avenue, MAC: N , Minneapolis, Minnesota 55479, Attention: Corporate Trust Services. PURPOSE OF THE SERIES 2015-A BONDS The Series 2015-A Bonds are being issued to provide funds to the Corporation which will be used to (i) provide the Corporation with moneys to finance Eligible Loans, (ii) fund the Reserve Fund, (iii) make an initial deposit to the Capitalized Interest Fund, and (iv) pay certain costs related to the issuance of the Series 2015-A Bonds. See ESTIMATED SOURCES AND USES OF PROCEEDS herein. 3

16 General SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS The Series 2015-A Bonds are limited obligations of the Corporation, payable solely from the Trust Estate pledged pursuant to the Indenture as described herein. None of the Corporation s assets or funds pledged and held in its general account or under its Prior Indentures (as hereinafter defined) are pledged as security for the Series 2015-A Bonds under the Indenture. The Series 2015-A Bonds will be secured by and payable, subject to the terms of the Indenture, solely from: (i) a portion of the proceeds derived from the sale of the Series 2015-A Bonds (net of the portion thereof in the approximate amount of $ to be transferred immediately to the Corporation outside of the Indenture, and proceeds to be used to pay costs of issuance of the Series 2015-A Bonds); (ii) Financed Loans (including the Contributed Loans and the Prefunded Loans); (iii) all Revenues (including, without limitation, payments of principal of and interest on Financed Loans); (iv) the moneys and securities in certain Funds established under the Indenture; and (v) certain other assets pledged under the Indenture, including, without limitation, any Derivative Product Agreement (collectively, the Trust Estate ). See ESTIMATED SOURCES AND USES OF PROCEEDS herein. The Corporation will Finance only Eligible Loans through application of the proceeds of the Bonds. For a discussion of certain of the terms applicable to the Eligible Loans, see THE CORPORATION S PRIVATE LOAN PROGRAMS Loan Terms herein. For a more detailed description of the Funds established under the Indenture, certain accounts established therein under the Indenture, and the purposes to which moneys in such Funds and Accounts may be applied, see APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS attached hereto. Reserve Fund On the Closing Date, $813,880 of the proceeds of the Series 2015-A Bonds will be deposited into the Reserve Fund, as described under USE OF PROCEEDS herein (which is equal to the Series 2015-A Reserve Requirement as of the date of issuance of the Series 2015-A Bonds). The Series 2015-A Reserve Requirement at any time shall be an amount equal to the greater of (i) an amount equal to two percent (2%) of the aggregate principal amount of Bonds then Outstanding, or (ii) one percent (1%) of the principal balance of the Series 2015-A Bonds as of the Closing Date, unless a Rating Agent Notification has been given for a lesser amount. The Reserve Fund is to be maintained at the Reserve Fund Requirement. Amounts on deposit in the Reserve Fund shall be transferred to the Revenue Fund to the extent the funds on deposit in the Revenue Fund, after taking into account any transfers from the Capitalized Interest Fund and the Student Loan Fund, are insufficient to make required transfers to the Rebate Fund; to pay, on each Monthly Payment Date, Servicing Fees, Trustee Fees and Program Expenses, if any; and to pay, on each Interest Payment Date and Principal Payment Date, (i) the interest and principal (at Stated Maturity) due on Bonds and (ii) Other Obligations (except, with respect to Derivative Preliminary, subject to change 4

17 Product Agreements, Termination Payments that are not Priority Termination Payments). The Indenture provides that upon the issuance of any Additional Bonds, there will be deposited into the Reserve Fund, if necessary, an amount sufficient to increase the amount therein to be equal to the Reserve Fund Requirement, calculated after such issuance. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Reserve Fund attached hereto. Capitalized Interest Fund On the Closing Date, $1,221,000 of the proceeds of the Series 2015-A Bonds will be deposited into the Capitalized Interest Fund, as described under USE OF PROCEEDS herein. Amounts on deposit in the 2015-A Account of the Capitalized Interest Fund shall be transferred to the Revenue Fund to the extent the funds on deposit in the Revenue Fund are insufficient to make required transfers to the Rebate Fund; to pay, on each Monthly Payment Date, Servicing Fees, Trustee Fees and Program Expenses, if any; and to pay, on each Interest Payment Date, (i) the interest due on Senior Bonds and (ii) Other Senior Obligations (except, with respect to Senior Derivative Product Agreements, Termination Payments that are not Priority Termination Payments). Funds in excess of $610,500 * remaining on deposit in the Capitalized Interest Fund after the June 1, 2016 Interest Payment Date will be immediately transferred to the Revenue Fund on such date. If, after giving effect to any transfer to be made from the Capitalized Interest Fund on the June 1, 2017, * Monthly Payment Date, any funds remain therein on such Monthly Payment Date, all such remaining funds shall be transferred to the Revenue Fund on such Monthly Payment Date. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Capitalized Interest Fund attached hereto. Additional Series of Bonds; Priority Pursuant to the provisions of the Indenture, Additional Bonds may be issued on a parity basis with the Series 2015-A Bonds (such Additional Bonds being referred to herein, together with the Series 2015-A Bonds, as Senior Bonds ), or on a basis subordinate to the Series A Bonds (such Additional Bonds, which include senior subordinate and subordinate Bonds, being referred to herein collectively as Subordinate Bonds ). In addition, the Corporation may enter into Derivative Product Agreements with one or more Derivative Product Counterparties. The Corporation s obligations under any such Derivative Product Agreements may be parity obligations with the Senior Bonds (such obligations being referred to herein as Other Senior Obligations and, together with the Senior Bonds, Senior Obligations ), or parity obligations with the Subordinate Bonds (such obligations being referred to herein as Other Subordinate Obligations and, together with the Subordinate Bonds, Subordinate Obligations ). See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE TERMS OF BONDS; Derivative Product Payments attached hereto. The Series 2015-A Bonds will be the first series of Bonds issued under the Indenture. It is a condition to the issuance of any Additional Bonds that they be rated the same as any Preliminary, subject to change. 5

18 Outstanding Bonds of the same seniority. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE TERMS OF BONDS and TERMS OF BONDS; General Limitations; Issuable in Series; Purposes and Conditions for Issuance; Payment of Principal and Interest attached hereto. Overcollateralization and Initial Parity Percentage Upon the issuance of the Series 2015-A Bonds, the initial Parity Percentage will be at least * %, which reflects (1) the receipt of a portion of the proceeds of the Series 2015-A Bonds (net of the portion thereof in the approximate amount of $ to be transferred immediately to the Corporation outside of the Indenture, and proceeds to be used to pay costs of issuance of the Series 2015-A Bonds), (2) the receipt by the Trustee of the Contributed Loans from the Corporation on the Closing Date, and (3) the reduction in the value of such Eligible Loans by accrued Excess Earnings associated therewith. See ESTIMATED SOURCES AND USES OF PROCEEDS and SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Overcollateralization and Initial Parity Percentage herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Revenue Fund attached hereto. Program Expenses, Servicing Fees and Trustee Fees The Program Expenses (including fees and expenses paid to others) of the Corporation incurred in carrying out and administering the portion of the Private Loan Programs financed through Bonds issued under the Indenture, the Servicing Fees to be paid or reimbursed to the Corporation with respect to the servicing of Financed Loans, and the Trustee Fees to be paid to the Trustee shall be provided for, if not from other sources of the Corporation, from Revenues. Such Program Fees, Servicing Fees and Trustee Fees will be paid out of the Revenue Fund on each Monthly Payment Date prior to the payment of principal and interest on the Series 2015-A Bonds. As provided in the First Supplemental Trust Indenture, with respect to the Series 2015-A Bonds, (i) such Program Expenses shall be $28,500 (reflecting the rating agency surveillance fees), (ii) such Servicing Fees shall not exceed 0.75 * % of the Financed Loans that are FFELP Loans as of the end of the preceding calendar month and such Servicing Fees shall not exceed 1.10 * % of the Financed Loans that are Private Loans as of the end of the preceding calendar month, subject to a minimum of $2.50 per borrower and to 3.00% inflation per annum, and (iii) such Trustee Fees shall not exceed 1/12 th of 0.01% of the Outstanding Bonds as of the end of the preceding calendar month. The Indenture permits the Corporation to change the amount of such fees after a Rating Agency Notification. See CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Rating Agency Notification The Indenture provides that the Rating Agencies have various notice rights and further requires as a condition of certain actions, inactions or other events that there be a Rating Agency Notification, including, but not limited to, issuance of Additional Bonds; determinations of the types of Private Loans to be included as Eligible Loans in the future; entry into Derivative * Preliminary, subject to change. 6

19 Product Agreements; changes in the Servicer or Backup Servicer; changes in the amount and timing of Program Expenses, the Servicing Fees and the Trustee Fees; changes in the Reserve Fund Requirement; types of Investment Securities; certain amendments or supplements to the Indenture; substitution or replacement of the Trustee; and establishment of, and changes in, the Parity Percentage with respect to the release of moneys from the Trust Estate. The Indenture also requires that the Corporation make any Rating Agency Notification publicly available in the manner applicable to post-issuance disclosures under Rule 15c2-12. Rating Agency Notification means, with respect to a Proposed Action, that the Corporation shall have given written notice of such Proposed Action to each Rating Agency then rating the Bonds at least twenty Business Days prior to the proposed effective date thereof. Proposed Action means any proposed action, failure to take an action or other event which, under the terms of the Indenture, is conditional on a Rating Agency Notification. The Corporation is required to give a Rating Agency Notification prior to any Proposed Action. In connection with any such Rating Agency Notification, the Corporation is required to use commercially reasonable efforts to provide each Rating Agency such factual data and cash flow analyses as such Rating Agency may reasonably request in order to review the Proposed Action. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Certain Risk Factors Attention should be given to certain investment considerations described in this Official Statement which could affect the ability of the Corporation to pay Debt Service on the Series 2015-A Bonds and which could have an effect on the market price of the Series 2015-A Bonds in the future to an extent that cannot be determined at the present time. See CERTAIN RISK FACTORS herein. Each prospective purchaser of Series 2015-A Bonds should read this entire Official Statement, including the Appendices attached hereto. General Terms of the Series 2015-A Bonds THE SERIES 2015-A BONDS The Series 2015-A Bonds will initially be dated and will bear interest from the date of delivery. Interest will be payable on June 1 and December 1 of each year, commencing December 1, 2015 *, to the registered owners (the Owners ) of the Series 2015-A Bonds as of the record date, which is the May 15 or November 15 immediately preceding each regularly scheduled interest payment date. The Series 2015-A Bonds will bear interest at the interest rates per annum, and will mature on December 1 in each of the years and in the principal amounts, shown on the inside front cover of this Official Statement. The Series 2015-A Bonds will be issued in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof. Individual purchases of the Series 2015-A Bonds will be made in book-entry form only. Purchasers of the Series 2015-A Bonds * Preliminary, subject to change. 7

20 will not receive certificates representing their interest in the Series 2015-A Bonds purchased. See Book-Entry Only System below. Redemption Provisions * The Indenture sets forth the provisions for the redemption of the Series 2015-A Bonds prior to maturity, as described below. The Trustee shall provide notice of the redemption of Series 2015-A Bonds in accordance with the provisions described below under Notice and Effect of Redemption and as described in APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE GENERAL TERMS AND PROVISIONS OF THE BONDS Redemption of Bonds attached hereto. Mandatory Non-Origination Redemption. * The Series 2015-A Bonds are subject to special mandatory redemption prior to their respective Stated Maturities, in whole or in part in any Authorized Denomination, on any date within sixty (60) days after the end of the Acquisition Period, at a Redemption Price equal to 100% of the principal amount of the Series 2015-A Bonds to be redeemed, plus (1) accrued interest to the Redemption Date; and (2) in the case of the redemption of the Series 2015-A Premium Bonds, the Unamortized Premium with respect to such Bonds, from moneys to be applied to such redemption at the direction of the Corporation consisting of or corresponding to proceeds of the Series 2015-A Bonds remaining in the 2015-A Subaccount of the Acquisition Account at the expiration of Acquisition Period. The amount to be applied to the redemption of Series 2015-A Bonds shall be equal to the amount designated to be expended by the expiration of the Acquisition Period less the amount committed to be used to originate or purchase Eligible Loans by the expiration of the Acquisition Period. Optional Redemption. * The Series 2015-A Bonds maturing on and after December 1, 2026 are subject to redemption at the option of the Corporation from moneys in the Revenue Fund and any other source available therefor in accordance with the Indenture, in whole or in part, at any time, commencing December 1, 2025 *, at a Redemption Price equal to 100% of the principal amount of the Series 2015-A Bonds to be redeemed, plus accrued interest to the Redemption Date with respect to such Bonds. Such redemption shall only be permitted if, as of the Monthly Payment Date preceding such redemption, all payments and transfers required to be made on such Monthly Payment Date pursuant to the Indenture have been made, or will be provided for. If any portion or all of the Redemption Price is to be paid from moneys in the Revenue Fund, such payment shall be made only to the extent moneys are available therefor after taking into account amounts necessary to (1) make all payments and transfers required to be made on or prior to the next succeeding Interest Payment Date pursuant to the Indenture, and (2) if such Interest Payment Date is a June 1, payment of one-half of the principal due and payable on the next succeeding December 1. Any such redemption will be applied to each such maturity on a pro-rata basis (or in such other manner as the Corporation may direct). Any such redemption of Series 2015-A Bonds of a maturity that is subject to cumulative mandatory sinking fund redemption is to be credited against Sinking Fund Installments applicable to such maturity as described in the last paragraph under Cumulative Mandatory Sinking Fund Redemption below. Preliminary, subject to change 8