Fitch Affirms Various SLM Student Loan Trusts
A full list of rating actions follows at the end of this press release.
KEY RATING DRIVERS
High Collateral Quality: In all trusts, the collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The current U.S. sovereign rating is 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): In all trusts, CE is provided by excess spread and, for the class A notes, subordination provided by the class B notes. The SLM 2005-6 trust also benefits from Overcollateralization (OC). As of March 2015, senior and total parity (respectively) for the series 2005-6 is 105.15% and 100.11%; for series 2005-7 105.55% and 100%; for series 2005-8 105.35% and 100%; and for series 2006-4 104.75% and 100%. The series 2005-6 and series 2005-7 trusts also benefit from spread supplement accounts currently sized at \$6,545,877 and \$6,931,693, respectively, which cover partial interest on the class A notes. Cash will continue to be released from the trusts as long as the target CE levels are maintained.
Adequate Liquidity Support: Liquidity support for the trusts is provided by reserve accounts, each currently sized at their respective floors, equal to: series 2005-6 \$4,950,100; series 2005-7 \$2,280,587; series 2005-8 \$3,780,805; and series 2006-4 \$3,769,627.
Acceptable Servicing Capabilities: Day-to-day servicing of all trusts is provided by Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.). In Fitch's opinion, this servicer is an acceptable servicer of FFELP student loans.
RATING SENSITIVITIES
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread, given that favorable basis factor conditions could lead to future upgrades.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following ratings:
SLM Student Loan Trust 2005-6:
--Class A-5A notes at 'AAAsf'; Outlook Stable;
--Class A-5B notes at 'AAAsf'; Outlook Stable;
--Class A-6 notes at 'AAAsf'; Outlook Stable;
--Class A-7 notes at 'AAAsf'; Outlook Stable;
--Class B notes at 'Asf'; Outlook Stable.
SLM Student Loan Trust 2005-7:
--Class A-3 notes at 'AAAsf'; Outlook Stable;
--Class A-4 notes at 'AAAsf'; Outlook Stable;
--Class A-5 notes at 'AAAsf'; Outlook Stable;
--Class B notes at 'Asf'; Outlook Stable.
SLM Student Loan Trust 2005-8:
--Class A-3 notes at 'AAAsf'; Outlook Stable;
--Class A-4 notes at 'AAAsf'; Outlook Stable;
--Class A-5 notes at 'AAAsf'; Outlook Stable;
--Class B notes at 'Asf'; Outlook Stable.
SLM Student Loan Trust 2006-4:
--Class A-5 notes at 'AAAsf'; Outlook Stable;
--Class A-6 notes at 'AAAsf'; Outlook Stable;
--Class B notes at 'Asf'; Outlook Stable.
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