Fitch Affirms SLM 2012-6 Notes

NEW YORK--()--Fitch Ratings has affirmed the senior and subordinate notes for SLM Student Loan Trust 2012-6 (SLM 2012-6) at 'AAAsf' and 'A+sf', respectively. The Rating Outlook remains Stable for the class A-2 notes and the Outlook has been revised to Negative from Stable for the class A-3 and class B notes.

The Outlook revision is due to Fitch's belief that the class A-3 and class B notes both carry a heightened level of extension risk. Based on Fitch's cash flow modelling runs, the class A-3 notes were not paid in full by their legal final maturity date of May 26, 2026 in a stressed scenario.

When an event of default occurs, it is highly likely that the class B notes will not receive timely interest as the principal for the class A notes must be paid in full prior to the class B notes receiving interest. Therefore, the subordinate notes are placed on Rating Outlook Negative. 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): 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 notes. As of June 2015, total parity is 101.01% (1.00% CE) and senior parity is 105.13% (5.50% CE). The trust has been releasing cash given the Specified Overcollateralization Amount, equal to the greater of 1.0% of the adjusted pool balance and $1,300,000, 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 $1,197,171.

Acceptable Servicing Capabilities: Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.) is responsible for the day-to-day servicing. Fitch believes Navient Solutions, Inc. 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 build-up of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Initial Key Rating Drivers and Rating Sensitivity further described in the presale report published on September 10, 2012.

DUE DILIGENCE USAGE

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

Fitch has affirmed and revised the Outlook for the following:

SLM Student Loan Trust, Series 2012-6:

--Class A-2 at 'AAAsf'; Outlook Stable;

--Class A-3 at 'AAAsf'; Outlook to Negative from Stable;

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

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 2012-6 - Appendix', dated Sept. 10, 2012;

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance

Transactions -- Amended', dated April 17, 2013.

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 2012-6 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=688595

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=989181

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=989181

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Jeffrey Prackup
Director
+1-212-908-0839
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, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Jeffrey Prackup
Director
+1-212-908-0839
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, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com