Fitch Upgrades SLM Student Loan Trust 2003-5 Sub Note; Affirms Sr Notes; Outlook Remains Stable

NEW YORK--()--Fitch Ratings affirms the senior notes issued by SLM Student Loan Trust 2003-5 at 'AAAsf'. In addition, Fitch upgrades the subordinate note to 'Asf' from 'BBBsf'. The Rating Outlook remains Stable for both classes.

KEY RATING DRIVERS

High Collateral Quality: The trust 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. On March 24, 2014, Fitch affirmed the U.S. sovereign rating at 'AAA' and assigned a Stable Outlook.

Sufficient Credit Enhancement (CE): While both the senior and subordinate notes will benefit from future excess spread, the senior notes also benefit from subordination provided by the class B note. As of February 2014, total parity is 100.00% and senior parity is 108.01% (7.42% CE). Cash is being released from the trust given that the 100% total parity is maintained.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the pool balance, and $2,251,218.

Acceptable Servicing Capabilities: Sallie Mae Inc., as servicer, is responsible for servicing the trust. Fitch believes Sallie Mae 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 CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch takes the following rating actions as indicated:

SLM Student Loan Trust 2003-5:

--Class A-5 affirmed at 'AAAsf'; Outlook Stable;

--Class A-6 affirmed at 'AAAsf'; Outlook Stable;

--Class A-7 affirmed at 'AAAsf'; Outlook Stable;

--Class A-8 affirmed at 'AAAsf'; Outlook Stable;

--Class A-9 affirmed at 'AAAsf'; Outlook Stable;

--Class B upgraded to 'Asf' from 'BBBsf'; Outlook Stable.

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

Applicable Criteria and Related Research:

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

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (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=827649

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Contacts

Fitch Ratings
Primary Analyst:
Paul Jiang, +1-212-908-9120
Analyst
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson:
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst:
Paul Jiang, +1-212-908-9120
Analyst
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson:
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com