(Updates with analyst's comments)

NEW YORK -(Dow Jones)- Nelnet Inc. has sold a $660 million student loan-backed deal, according to a person familiar with the matter.

The bond, dubbed NSLT 2010-2, sold via the private placement market at 85 basis points over three-month London interbank offered rate, or Libor.

The lead on the single-tranche 5.71-year deal was Citigroup Inc. (C) and Barclays Capital was the co-manager.

It is backed by FFELP student loans, which are guaranteed for at least 97% of defaulted principal and accrued interest by guarantee agencies and reinsured by the U.S. Department of Education.

"The deal was done on reverse enquiry," said Jim Harrington, a senior portfolio manager at Ryan Labs Asset Management in New York. This means investors requested the issuer to put together a bond they were willing to purchase.

The sale of such asset-backed deals after the effective end of a Federal Reserve program to boost this market, is a sign of recovery. The Fed stepped in with offers of low-cost nonrecourse loans for investors to buy newly created consumer loan-backed deals in March last year, after investors grew wary of collateral backing the bonds and refused to purchase any.

The final loan application deadline for the Term Asset-Backed Securities Loan Facility, or TALF, was March 4.

On Thursday, World Financial Network had a $93 million retail credit card loan-backed deal, Harrington said.

"We are getting small deals run by smaller dealers," he added.

Other asset-backed deals on offer this week include a $250 million timeshare receivables-backed deal from Wyndham Worldwide Corp. (WYN) via the private 144A market, according to a person familiar with the matter.

Premier Aircraft Leasing also has a $298 million secured fixed rate note. It is guaranteed by Export-Import Bank of the U.S. Goldman Sachs group Inc. (GS), JP Morgan Chase & Co. (JPM) and Credit Agricole (ACA.FR, CRARY) are joint leads. The note is to refinance the acquisition of two Boeing Co. (BA) 777-300 aircraft and three Boeing 737-800 aircraft acquired by the lessors.

Industry participants say the Fed's TALF program, through which more than $100 billion in deals were sold in the past year, has rejuvenated this market, essential to lower the cost of borrowing for consumers.

Mainstream sectors like bonds backed by auto loans and credit card debt, have become stable enough that the end of TALF was deemed a "non-event" but the more esoteric sectors may see lower issuance and wider risk premiums.

The "true test" for the asset-backed market would be a large deal, but for now, "there is no overwhelming need for anyone to come to market," Harrington said. "People issued while TALF was around."

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