NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the SLM Student Loan Trust 2006-5 senior notes at 'AAAsf' and subordinate note at 'Asf'. The Rating Outlook remains Stable.
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. The current U.S. sovereign rating is 'AAA' with a Stable Outlook.
Sufficient Credit Enhancement (CE): CE is provided by excess spread and, for the class A notes, subordination provided by the class B notes. As of March 2015, total parity is 100.00% and senior parity is 104.91% (4.68% CE). Cash is being released from the trust given that the target total parity of 100% is maintained.
Adequate Liquidity Support: Liquidity support is provided by a reserve account which is sized at the greater of 0.25% of the pool balance and $4,524,559, currently equal to the floor.
Acceptable Servicing Capabilities: Day-to-day servicing is provided by Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.). In Fitch's opinion, this servicer 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 that favorable basis factor conditions could lead to future upgrades.
Fitch has affirmed the following ratings with a Stable Outlook:
SLM Student Loan Trust Series 2006-5:
--Class A4 at 'AAAsf'; Outlook Stable;
--Class A5 at 'AAAsf'; Outlook Stable;
--Class A6-A at 'AAAsf'; Outlook Stable;
--Class A6-B at 'AAAsf'; Outlook Stable;
--Class A6-C at 'AAAsf'; Outlook Stable;
--Class B at 'Asf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' dated Mar. 31, 2015;
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' dated June 23, 2014.
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984345
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