Fitch Affirms SLM Student Loan Trust 2013-6; Outlook on Class A-3 & B Revised to Negative
OREANDA-NEWS. Fitch Ratings has affirmed the senior notes for SLM Student Loan Trust 2013-6 at 'AAAsf' and subordinate note at 'A+sf'. The Rating Outlook remains Stable for classes A-1 and A-2. Fitch has revised the Outlook for class A-3 and B to Negative from Stable.
The Outlook revision for class A-3 is due to Fitch's belief that the note carries a heightened level of extension risk. Based on Fitch's cash flow modelling runs, the note was not paid in full by its legal final maturity date of June 26, 2028 in a stressed scenario. Under such scenarios, this may result in a technical default, although Fitch would expect ultimate repayment of full principal and interest afterwards. If a default occurs for the class A-3, it is highly likely that the class B note will not receive timely interest, as the principal for the class A notes must be paid in full prior to the class B note receiving interest. Therefore, the Outlook on the subordinate note is revised to Negative.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% 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 at 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): The CE is provided by overcollateralization and future excess spread. Additionally, the senior note also benefits from subordination provided by the class B note. As of August 2015, total parity is 101.01% (1% CE) and senior parity is 104.81% (4.59% CE). Cash is being released from the trust given that the targeted CE (greater of 1.00% of the adjusted pool balance, or $1.25 million) is maintained.
Adequate Liquidity Support: Liquidity support for the note is provided by a reserve account (0.25% of pool balance or $998,463).
Acceptable Servicing Capabilities: Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.), as servicer, will be responsible for servicing the portfolio. Fitch has reviewed the servicing operations of Navient Solutions and believes it to be acceptable servicer of FFELP student loans.
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 build-up of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.
DUE DILIGENCE USAGE
Fitch was not provided due diligence information from any third parties relating to the SLM Student Loan Trust 2013-6.
Fitch has affirmed the following:
SLM Student Loan Trust 2013-6
--Class A-1 at 'AAAsf'; Outlook Stable;
--Class A-2 at 'AAAsf'; Outlook Stable;
--Class A-3 at 'AAAsf'; Outlook to Negative from Stable;
--Class B at 'A+sf'; Outlook to Negative from Stable.