NEW YORK–(BUSINESS WIRE)–Link to Fitch Ratings’ Report: Navient Student Loan Trusts: 2014-2,
2014-3, 2014-4, 2014-5, 2014-6 and 2014-7 (US ABS) http://bit.ly/1pv8DLO
Fitch Ratings expects to rate Navient Student Loan Trusts 2014-2 through
2014-7. A full list of ratings follows at the end of this release.
KEY RATING DRIVERS
High Collateral Quality: Each trust’s collateral consists of 100%
Federal Family Education Loan Program (FFELP) consolidation loans,
approximately 15% of which are rehabilitated loans. The credit quality
of the trusts’ collateral is high as the trust student loans are
guaranteed for at least 97% principal and accrued interest by the U.S.
Department of Education (ED). Fitch currently rates the U.S. at ‘AAA’
with a Stable Outlook.
Sufficient Credit Enhancement: The cash flow results for the class A and
B notes in each trust were satisfactory under Fitch ‘AAAsf’ and ‘AAsf’
stresses, respectively. Total credit enhancement (CE) for each trust is
provided by initial overcollateralization (OC) of approximately 2.3% of
trust collateral balance, excess spread and, in the case of the class A
notes, approximately 2.7% of subordination provided by the class B
notes. A target OC amount equal to the greater of 4.50% of the adjusted
pool balance and $2.75 million must be met before excess cash can be
released.
Adequate Liquidity Support: Liquidity support is provided by a reserve
account sized at 2.25% of initial student loan balance and funded at
closing. The required reserve account balance for any distribution dates
prior to Aug. 25, 2019 (the step-down date) is 2.25% of the current
student loan balance; then on and after the step-down date, the greater
of 0.25% of the current student loan balance and 0.10% of the initial
student loan balance.
Acceptable Servicing Capabilities: Navient Solutions, Inc. (formerly
known as Sallie Mae, Inc.) will service approximately 79% of each
trust’s student loan pool; Xerox Education Services, LLC (Xerox-ES) will
service 13% of 2014-2 and 21% of each of 2014-3 through 2014-7 pools;
Great Lakes Education Loan Services, Inc. (Great Lakes) will service 8%
of 2014-2. In Fitch’s opinion, all of the servicers are acceptable
servicers 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 CE driven by positive excess spread given
favorable basis factor conditions could lead to future upgrades.
Key Rating Drivers and Rating Sensitivities are further described in the
pre-sale report titled ‘Navient Student Loan Trusts: 2014-2, 2014-3,
2014-4, 2014-5, 2014-6 and 2014-7′, dated Aug. 5, 2014, available on www.fitchratings.com,
or by clicking on the link.
Fitch assigns expected ratings to the following:
Navient Student Loan Trust 2014-2
–$256,000,000 class A notes ‘AAAsf(exp)’; Outlook Stable;
–$7,000,000 class B notes ‘AAsf(exp)’; Outlook Stable.
Navient Student Loan Trust 2014-3
–$256,000,000 class A notes ‘AAAsf(exp)’; Outlook Stable;
–$7,000,000 class B notes ‘AAsf(exp)’; Outlook Stable.
Navient Student Loan Trust 2014-4
–$256,400,000 class A notes ‘AAAsf(exp)’; Outlook Stable;
–$7,000,000 class B notes ‘AAsf(exp)’; Outlook Stable.
Navient Student Loan Trust 2014-5
–$154,100,000 class A notes ‘AAAsf(exp)’; Outlook Stable;
–$4,200,000 class B notes ‘AAsf(exp)’; Outlook Stable.
Navient Student Loan Trust 2014-6
–$153,800,000 class A notes ‘AAAsf(exp)’; Outlook Stable;
–$4,200,000 class B notes ‘AAsf(exp)’; Outlook Stable.
Navient Student Loan Trust 2014-7
–$153,800,000 class A notes ‘AAAsf(exp)’; Outlook Stable;
–$4,200,000 class B notes ‘AAsf(exp)’; Outlook Stable.
Additional information is available at ‘www.fitchratings.com‘.
Applicable Criteria and Related Research:
–’Global Structured Finance Rating Criteria’ (May 20, 2014);
–’Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria’ (June 23, 2014).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
Rating U.S. Federal Family Education Loan Program Student Loan ABS
Criteria
Additional Disclosure
Solicitation Status
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: http://bit.ly/1pv8DLU.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.
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