Fitch Maintains Rtg Watch Negative on SLM Student Loan Trust 2013-1 Sr Notes; Affs Sub Note at 'Asf'

NEW YORK--()--Fitch Ratings maintains the Rating Watch Negative on the senior notes currently rated 'AAAsf' and affirms the subordinate note at 'Asf', Outlook Stable issued by SLM Student Loan Trust 2013-1.

KEY RATING DRIVERS

High Collateral Quality: The collateral consists of 100% of 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.

Rating Watch Maintained: 'AAAsf' rated tranches of U.S. FFELP student loan ABS are maintained on Rating Watch Negative following the revision of the U.S. sovereign rating on Oct. 15, 2013.

Sufficient Credit Enhancement: While both the senior and subordinate notes will benefit from overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread, the senior notes also benefit from subordination provided by the class B note. As of December 2013, total parity is 101.01% (1.0% CE) and senior parity is 104.25% (4.08% CE). Cash is being released from the trust given that the target OC level of the greater of 1.0% of the adjusted pool balance and $2,000,000 has been maintained.

Adequate Liquidity Support: Liquidity support is provided by a Debt Service Reserve Fund sized at the greater of 0.25% of the pool balance and $1,249,779.

Acceptable Servicing Capabilities: Sallie Mae Inc., is responsible for day-to-day servicing of the trust. Fitch believes SLM is an acceptable servicer 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 credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Initial Key Rating Drivers and Rating Sensitivity further described in the Presale report published on Feb. 4, 2013.

Fitch has taken the following rating actions:

SLM Student Loan Trust 2013-1:

--Class A-1 note at 'AAAsf'; Rating Watch Negative maintained;

--Class A-2 note at 'AAAsf'; Rating Watch Negative maintained;

--Class A-3 note at 'AAAsf'; Rating Watch Negative maintained;

--Class B note affirmed at 'A+sf'; Outlook Stable.

A comparison of the transaction's RW&Es to those of typical RW&Es for student loans is available by accessing the reports and links below:

--'SLM Student Loan Trust 2013-1 - Appendix', dated Feb. 4, 2013;

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended', dated April 17, 2012.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' dated May 24, 2013;

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated May 17, 2013.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=817973

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Contacts

Fitch Ratings
Primary Analyst
Jared Smith
Analyst
+1-212-908-0371
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Jared Smith
Analyst
+1-212-908-0371
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com