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Rating Action:

Moody's takes action on 12 tranches from nine FFELP securitizations administered by Navient

07 Mar 2017

Approximately $1.4 billion of asset-backed securities affected

New York, March 07, 2017 -- Moody's Investors Service, ("Moody's") has upgraded the ratings of 12 tranches in nine transactions administered by Navient Solutions, LLC (Navient). The securitizations are backed by student loans originated under the Federal Family Education Loan Program (FFELP) that are guaranteed by the US government for a minimum of 97% of defaulted principal and accrued interest.

The complete rating actions are as follow:

Issuer: SLC Student Loan Trust 2005-3

Cl. B, Upgraded to Aaa (sf); previously on Nov 1, 2016 Downgraded to A1 (sf)

Issuer: SLC Student Loan Trust 2006-1

Cl. A-6, Upgraded to Aaa (sf); previously on Nov 1, 2016 Downgraded to Aa1 (sf)

Cl. B, Upgraded to Aaa (sf); previously on Nov 1, 2016 Downgraded to Baa2 (sf)

Issuer: SLM Student Loan Trust 2004-5

Cl. B, Upgraded to Baa2 (sf); previously on Nov 18, 2016 Downgraded to Baa3 (sf)

Issuer: SLM Student Loan Trust 2005-4

Cl. B, Upgraded to Aaa (sf); previously on Nov 1, 2016 Downgraded to A1 (sf)

Issuer: SLM Student Loan Trust 2005-8

Cl. B, Upgraded to Aaa (sf); previously on Nov 1, 2016 Downgraded to A1 (sf)

Issuer: SLM Student Loan Trust 2006-7

Cl. B, Upgraded to Aa1 (sf); previously on Nov 18, 2016 Downgraded to Baa1 (sf)

Issuer: SLM Student Loan Trust 2007-8

Cl. A-5, Upgraded to A1 (sf); previously on Nov 1, 2016 Downgraded to A3 (sf)

Cl. B, Upgraded to A1 (sf); previously on Nov 1, 2016 Downgraded to Baa3 (sf)

Issuer: SLM Student Loan Trust 2008-5

Cl. B, Upgraded to A1 (sf); previously on Nov 1, 2016 Downgraded to Baa3 (sf)

Issuer: SLM Student Loan Trust 2008-8

Cl. A-3, Upgraded to Baa2 (sf); previously on Nov 1, 2016 Downgraded to Baa3 (sf)

Cl. B, Upgraded to A1 (sf); previously on Nov 1, 2016 Downgraded to Baa3 (sf)

RATINGS RATIONALE

Today's actions are prompted by Navient's extension of the legal final maturity date of all notes -- except Cl. A-5 in SLM Student Loan Trust 2007-8 and Cl. A-3 in SLM Student Loan Trust 2008-8. Navient amended deal documents to extend the legal final maturity dates by between 14 and 46 years. The extension of the legal maturity date mitigates the risk arising from low payment rates on the underlying securitized pools of student loans. While extension of legal maturity reduces the risk of technical default at maturity, it does not eliminate the risk of insufficient collateral cash flows to pay off the bonds in full.

The upgrades Cl. A-5 in SLM Student Loan Trust 2007-8 and Cl. A-3 in SLM Student Loan Trust 2008-8 are due to faster than expected paydown of the notes since the previous rating action.

Moody's derives the expected loss of each tranche by running its standard 28 cash flow scenarios and using the weights associated with each scenario. The upgrades and affirmations are primarily a result of Moody's analysis indicating that the expected losses of the tranches across Moody's cash flow scenarios are consistent with the expected loss benchmarks in Moody's idealized loss tables for the ratings assigned in today's actions.

The principal methodology used in these ratings was "Moody's Approach to Rating Securities Backed by FFELP Student Loans" published in August 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Factors that would lead to an upgrade or downgrade of the ratings:

Up

Moody's could upgrade the ratings if the paydown speed of the loan pool increases as a result of declining borrower usage of deferment, forbearance and IBR, increasing voluntary prepayment rates, or prepayments with proceeds from sponsor repurchases of student loan collateral. Moody's could also upgrade the rating owing to a build-up in credit enhancement.

Down

Moody's could downgrade the ratings if the paydown speed of the loan pool declines as a result of low voluntary prepayments, and high deferment, forbearance and IBR rates, which would threaten full repayment of the classes by their final maturity dates. In addition, because the US Department of Education guarantees at least 97% of principal and accrued interest on defaulted loans, Moody's could downgrade the ratings of the notes if it were to downgrade the rating on the United States government.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

In rating this transaction, Moody's used a cash flow model to model cash flow stress scenarios to determine the extent to which investors would receive timely payments of interest and principal in the stress scenarios, given the transaction structure and collateral composition.

Moody's quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows. Moody's weights the impact on the rated instruments based on its assumptions of the likelihood of the events in such scenarios occurring.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Vincent Raia
Associate Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Caroline Pichon
Vice President - Senior Analyst
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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