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