Fitch Takes Various Actions on SLM 2013-1

NEW YORK--()--Fitch Ratings has taken the following rating actions on SLM Student Loan Trust 2013-1, administered by Navient:

--Class A-2 at 'AAAsf'; Rating Watch Negative maintained;

--Class A-3 'AAAsf' placed on Rating Watch Negative;

--Class B at 'A+sf'; Rating Watch Negative maintained.

KEY RATING DRIVERS

Maturity Risk: The Negative Watch is based on the heightened risk of SLM 2013 -1 class A-2, A-3 and class B notes missing their respective legal final maturities of Sept. 25, 2019, May 26, 2026, and November 25, 2043, which would result in an event of default. In an event of such technical default, Fitch would expect ultimate repayment of full principal and interest after the legal final maturity date. The magnitude of the rating action taken then could vary depending on remaining time to maturity, recent payment trends, issuer actions such as loan purchases, or other external factors. Absent any issuer actions, structural or other mitigants, it is possible that 'AAA' ratings could be downgraded to noninvestment-grade rating categories. Fitch expects to complete its review and resolve the Rating Watch status over the next three to six months.

Collateral Quality: SLM 2013-1 is collateralized by 100% 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 for the FFELP loans. The U.S. is currently rated 'AAA'; Outlook Stable.

Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the class A notes, subordination provided by the class B notes. As of October 2015, total and senior parities are 101.01% (1% CE) and 105.44% (5.16% CE), respectively. The trust has been releasing and will continue to release cash as long as the target OC level of the greater of 1% of the adjusted pool balance and $2,000,000 is maintained.

Liquidity support: Liquidity support for the series 2013-1 notes is provided by a reserve account (greater of 0.25% of the pool balance and $1,249,779). The reserve fund is sized at $2,099,930.38 as of October 2015.

Servicing Capabilities: Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.) is the servicer of the trust's student loan pool. In Fitch's opinion, Navient Solutions, Inc. is an acceptable servicer of FFELP student loans.

On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria', dated June 23, 2014. Fitch has reviewed this transaction under both the existing and proposed criteria, which has resulted in placing the SLM 2013-1 A-3 notes on Rating Watch Negative.

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.

DUE DILIGENCE USAGE

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

Additional information is available at www.fitchratings.com.

Applicable Criteria

Exposure Draft: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria -- Amended (pub. 04 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874971

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

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=996237

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Eric Orenstein
Analyst
+1-646-582-4816
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Managing Director
+1-212-908-0556
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Eric Orenstein
Analyst
+1-646-582-4816
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Michael Dean
Managing Director
+1-212-908-0556
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com