Fitch Affirms SLM 2013-4 Notes; Revises Senior Outlook to Negative

NEW YORK--()--Fitch Ratings has affirmed the senior notes for SLM Student Loan Trust 2013-4 at 'AAAsf' and subordinate notes at 'A+sf'. The Rating Outlook for the senior notes is revised to Negative from Stable, while the Rating Outlook for the subordinate notes remains Stable.

The Rating Outlook revision is due to Fitch's belief that the senior notes carry a heightened level of extension risk. Based on Fitch's cash flow modelling runs, the notes were not paid in full by their legal final maturity date on June 25, 2027 in a stressed scenario. Under such scenarios, this may result in technical defaults, although Fitch would expect ultimate repayment of full principal and interest afterwards.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral comprises Federal Family Education Loan Program (FFELP) loans with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch's current U.S. sovereign rating is 'AAA' with a Stable Outlook.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the senior notes, subordination of the class B note. As of May 2015, total parity is 101.01% (1.00% CE) and senior parity is 104.70% (4.49% CE). The trust has been releasing cash given the specified OC amount of the greater of 1.0% of the adjusted pool balance and $1,000,000 is maintained.

Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund currently sized at the greater of 0.25% of the pool balance and $748,897.

Acceptable Servicing Capabilities: Day-to-day servicing is provided by Navient Corporation (formerly known as Sallie Mae, Inc.). Fitch believes Navient is an acceptable servicer of FFELP student loans.

RATING SENSITIVITIES

Since the FFELP student loan ABS relies 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.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

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 2013-4 - Appendix', dated Aug 5, 2013;

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

Fitch has affirmed the following:

SLM Student Loan Trust Series 2013-4:

--Class A at 'AAAsf'; Outlook revised to Negative from Stable;

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

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530

Related Research

SLM Student Loan Trust 2013-4 - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715841

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=988423

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=988423

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Harry Kohl
Associate Director
+1-212-908-0837
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Harry Kohl
Associate Director
+1-212-908-0837
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-9171
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com