Fitch Rates SLM Private Education Loan Trust 2013-B
NEW YORK -- May 2, 2013
Fitch Ratings assigns ratings to the private education loan-backed notes
issued by SLM Private Education Loan Trust 2013-B as follows:
--$680,000,000 class A-1 notes 'AAAsf'; Outlook Stable
--$245,000,000 class A-2A notes 'AAAsf'; Outlook Stable
--$100,000,000 class A-2B notes 'AAAsf'; Outlook Stable
--$110,000,000 class B notes 'Asf'; Outlook Stable
KEY RATING DRIVERS
Adequate Collateral Quality: The 2013-B trust pool consists of credit-tested
private student loans originated under SLM's private student loan programs and
underwritten to the respective guidelines. As of the Feb. 27, 2013 statistical
cutoff date, the weighted average Fair Isaac Corp. (FICO) score at origination
was 740; 95% of the loans in the pool were made to four-year schools, and 80%
of the loans in the pool were co-signed; and none of the loans were more than
30 days past due or involved in a bankruptcy proceeding.
Sufficient Credit Enhancement: Transaction cash flows were satisfactory under
all stressed scenarios at Fitch Ratings' 'AAAsf' and 'Asf' rating categories.
Credit enhancement (CE) is provided by overcollateralization (OC) and excess
spread, and, for class A notes, the subordination of class B notes. The
initial CE for the senior and subordinate notes is expected to be
approximately 21.7% and 13.3%, respectively. Funds cannot be used to pay any
unpaid trustee fees and expenses or carryover servicing fees, unless the total
OC builds up to 40% of the outstanding pool balance or 1% of the initial pool
balance, whichever is higher.
Adequate Liquidity Support: Liquidity support is provided by a reserve
account, which will be fully funded at closing and maintained at $2.45
million, or 0.25% of the initial pool balance. As of the statistical cutoff
date, 91.2% of the loans were required to make repayments, of which 60.2%
(mostly Smart Option loans) were required to make either interest-only or
fixed payments of $25 during the in-school, grace or deferment period.
Satisfactory Servicing Capabilities: Sallie Mae Inc., a subsidiary of SLM,
will service all the loans in the 2013-B trust. Fitch has reviewed the
servicing operations of Sallie Mae and considers it an effective private
student loan servicer.
As Fitch's base case default proxy is derived primarily from historical
collateral performance, actual performance may differ from the expected
performance, resulting in higher loss levels and/or prepayment speeds than the
base case. This will result in a decline in available CE and the remaining
loss coverage levels available to the notes. Therefore, note ratings may be
susceptible to potential negative rating actions, depending on the extent of
the decline in the coverage.
Rating sensitivity results should only be considered as one potential outcome,
as the transaction is exposed to multiple dynamic risk factors. Rating
sensitivity should not be used as an indicator of future rating performance.
Fitch's stress analysis is discussed in the presale titled 'SLM Private
Education Loan Trust 2013-B', dated April 23, 2013.
The presale report is available to all investors on Fitch's website at
www.fitchratings.com. For more information about Fitch's comprehensive
subscription service Fitch Research, which includes all presale reports,
surveillance, and credit reports on more than 20 asset classes, contact
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Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'U.S. Private Student Loan ABS Criteria' (Jan. 29, 2013);
--'Criteria for Interest Rate Stresses in Structured Finance Transactions and
Covered Bonds' (Jan. 25, 2013);
--'Counterparty Criteria for Structured Finance Transactions' (May 30, 2012);
--'Counterparty Criteria for Structured Finance Transactions: Derivative
Addendum' (May 30, 2012);
--'Representations, Warranties and Enforcement Mechanism in Global Structure
Finance Transactions' (April 17, 2012)
Applicable Criteria and Related Research
Global Structured Finance Rating Criteria
U.S. Private Student Loan ABS Criteria
Criteria for Interest Rate Stresses in Structured Finance Transactions
Counterparty Criteria for Structured Finance Transactions
Counterparty Criteria for Structured Finance Transactions: Derivative Addendum
Representations, Warranties, and Enforcement Mechanisms in Global Structured
Finance Transactions -- Amended
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Melvin Zhou, +1-212-908-0503
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Tracy Wan, +1-212-908-9171
Sandro Scenga, +1-212-908-0278
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