NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the SLM Student Loan Trust series 2006-10 senior notes at 'AAAsf' and the subordinate notes at 'Asf'. The Rating Outlook remains Stable for all the notes.
Key Rating Drivers
High Collateral Quality: The trust collateral is comprised 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 at least 97% reinsurance of principal and accrued interest provided by the U.S. Department of Education (ED). The current U.S. sovereign rating is 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement: Credit enhancement is provided by excess spread and overcollateralization. In addition, the class A notes benefit from subordination provided by the class B notes. As of October 2014, the total and senior parity levels remain at 100.00% and 105.06%, respectively. The parity levels have remained stable as the trust is paying the notes prorata and releasing excess above the release level of 100.00%.
Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the current pool balance and $6,034,845 floor. The current reserve balance is at its floor.
Acceptable Servicing Capabilities: Navient Solutions is the servicer of this trust. In Fitch's opinion, Navient 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.
Fitch has taken the following rating actions:
SLM Student Loan Trust Series 2006-10
--Class A-4 affirmed at 'AAAsf'; Outlook Stable;
--Class A-5A affirmed at 'AAAsf'; Outlook Stable;
--Class A-5B affirmed at 'AAAsf'; Outlook Stable;
--Class A-6 affirmed at 'AAAsf'; Outlook Stable;
--Class B affirmed at 'Asf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' dated August 2014;
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated June 2014.
Applicable Criteria and Related Research:
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=956475
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