NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns ratings to SLM Student Loan Trust 2013-2 as follows:
--$1,211,000,000 floating rate class A notes, 'AAAsf'; Outlook Negative;
--$35,000,000 floating rate class B notes, 'A+sf'; Outlook Stable.
KEY RATING DRIVERS
High Collateral Quality: The trust collateral consists of 100% FFELP student loans with guaranties provided by the transaction's eligible guarantors for at least 97% of principal and accrued interest, and the reinsurance provided by the U.S. Department of Education (ED).
Sufficient Credit Enhancement (CE): Cash flow scenarios for the class A and B notes were satisfactory under Fitch's stresses. At closing, total parity is expected to be 100.80% and senior parity is expected to be 103.71%. Total credit enhancement (CE) is provided by overcollateralization (OC; about $9.95 million at closing), excess spread, and, in the case of class A notes, 2.8% subordination provided by the class B notes.
Adequate Liquidity Support: Liquidity support for the SLM 2013-2 notes is provided by a $7.49 million reserve account (0.60% of outstanding notes), funded at closing with note proceeds.
Satisfactory Servicing Capabilities: Sallie Mae, Inc., as servicer, will be responsible for servicing the 2013-2 portfolio. Fitch believes Sallie Mae is an acceptable servicer of FFELP student loans.
Negative Rating Outlooks Assigned: Fitch's Rating Outlook for all existing and new issuances of 'AAAsf' rated tranches of FFELP securitizations remains Negative, which reflects Fitch's Negative Rating Outlook on the long-term foreign and local currency Issuer Default Ratings (IDRs) of the U.S.
RATING SENSITIVITY
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 favorable basis factor conditions could lead to future upgrades.
Key Rating Drivers and Rating Sensitivities are further described in the pre-sale report titled 'SLM Student Loan Trust 2013-2', dated April 2, 2013, available on www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (April 1, 2013);
--'SLM Student Loan Trust 2013-2' (April 2, 2013).
Applicable Criteria and Related Research
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704322
SLM Student Loan Trust 2013-2 (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704747
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