NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the senior notes at 'BBBsf' issued by SLM Student Loan EDC Repackaging Trust 2013-M1. The Rating Outlook remains Stable.
KEY RATING DRIVERS
Ratings on the Underlying Trusts: Fitch currently rates the senior and subordinate notes issued from the underlying trusts 'AAAsf'/Outlook Stable and 'Asf'/Outlook Stable, respectively. Since excess cash can only be released from the underlying trusts after interest and principal payments are made to the senior and subordinate notes, Fitch does not expect the ratings on the class M notes to be higher than the ratings on the subordinate notes of the underlying trusts. However, the rating of the class M notes is not directly linked to the ratings of the underlying subordinate notes.
High Collateral Quality of the Underlying Trusts: The underlying trusts are collateralized by consolidation loans originated under the Federal Family Education Loan Program (FFELP), with guaranties provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest.
Stable Performance of the Underlying Trusts: The underlying trusts have been generating more than 100 basis points (bps) of annualized excess spreads since late 2009. The excess spreads came under pressure during the financial crisis due to basis risk spikes but remained in the positive territory. Prepayments have remained relatively low with the exception of two periods of heightened levels driven by one-off regulatory events.
Sufficient Credit Enhancement: While there is no hard credit enhancement for the class M notes, Fitch expects that the excess cash released from the underlying trusts will be sufficient to cover interest and principal payments of the class M notes under Fitch's 'BBBsf' stresses.
Adequate Liquidity Support: Liquidity support for the class M notes is provided by a reserve account, which was fully funded at closing and will be maintained at 6.3% of the outstanding balance of the class M notes, or $800,000, whichever is higher.
Acceptable Servicing Capabilities: Navient Solutions, Inc., as servicer, is responsible for servicing the three underlying trust. Fitch believes Navient Solutions, Inc. is an acceptable servicer of FFELP student loans.
RATING SENSITIVITIES
Fitch does not expect the ratings on the class M notes to be higher than the ratings on the subordinate notes of the underlying trusts. However, the rating of the class M notes is not directly linked to the ratings of the underlying subordinate notes, i.e. an upgrade to the underlying subordinate notes does not automatically lead to an upgrade to the class M notes.
Fitch conducts a sensitivity analysis for each deal by stressing prepayments and basis spread between 3ML and 1ML. Increases of 50% and 100% are applied to the base case prepayment rate (7.5%). Separately, increases of 7.5 bps and 15 bps are applied to the base case basis spread (1 bp).
Fitch's stress analysis is discussed in the presale titled 'SLM Student Loan EDC Repackaging Trust 2013-M1', dated April 11, 2013.
Fitch has affirmed the following rating:
SLM Student Loan EDC Repackaging Trust 2013-M1:
--Class M at 'BBBsf'; Outlook Stable.
A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms (RW&Es) to those of typical RW&Es for that asset class is available by accessing the appendix that accompanies the initial Presale Report. Please refer to ' SLM Student Loan EDC Repackaging Trust 2013-M1 -- Appendix ', published on April 11, 2013 at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (March 2015);
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (June 2014);
--'SLM Student Loan EDC Repackaging Trust 2013-M1 (US ABS)' (April 11, 2013);
--'SLM Student Loan EDC Repackaging Trust 2013-M1 -- Appendix' (April 11, 2013);
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (March 2015).
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
SLM Student Loan EDC Repackaging Trust 2013-M1 (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=705260
SLM Student Loan EDC Repackaging Trust 2013-M1 -- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=705495
Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863817
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985109
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