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Fitch Rates Navient Private Education Loan Trust 2016-AFitch Ratings has assigned ratings to Navient Private Education Loan Trust 2016-A as follows: --$130,000,000 class A-1 notes 'AAAsf'; Outlook Stable; --$150,000,000 class A-2A notes 'AAAsf'; Outlook Stable; --$150,000,000 class A-2B notes 'AAAsf'; Outlook Stable; --$58,000,000 class B notes 'AAsf'; Outlook Stable. KEY RATING DRIVERS Strong Collateral Quality: The 2016-A trust pool consists of credit-tested private student loans originated under Navient's private student loan programs and underwritten to the respective guidelines. As of the Nov. 8, 2015 statistical cutoff date, the weighted average Fair Isaac Corp. (FICO) score at origination was 720; 80% of the loans in the pool were made to four-year schools; 69% of the loans in the pool were co-signed; and none of the loans were more than 60 days past due or involved in a bankruptcy proceeding. Sufficient Credit Enhancement: Transaction cash flows were satisfactory under all stressed scenarios at Fitch's 'AAAsf' and 'AAsf' 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 41.6% and 33.7%, respectively. Funds cannot be released from the trust unless the OC (excluding the reserve fund) builds up to 36.5% of the outstanding pool balance or 10% 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 0.25% of the initial pool balance. As of the statistical cutoff date, approximately 84.4% of the loans were required to make repayments. Satisfactory Servicing Capabilities: Navient Solutions, Inc., a wholly owned subsidiary of Navient, will service all the loans in the 2016-A trust. Fitch has reviewed the servicing operations of Navient Solutions, Inc. and considers it to be an effective private student loan servicer. RATING SENSITIVITIES 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. Key Rating Drivers and Rating Sensitivities are further described in the pre-sale report titled 'Navient Student Private Education Loan Trust 2016-A', dated Jan. 21, 2016, on www.fitchratings.com, or by clicking on the link. DUE DILIGENCE USAGE Fitch was provided with third-party due diligence information from KPMG LLP. The third-party due diligence focused on comparing or recomputing certain information with respect to 361 loans from the statistical data file. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis. A copy of the ABS (News - Alert) Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in Navient Private Education Loan Trust 2016-A - Appendix'. These R&Ws are compared to those of typical R&Wfor the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated June 2015. Additional information is available at www.fitchratings.com. Applicable Criteria Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158 Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 14 May 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744175 Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868 Global Structured Finance Rating Criteria (pub. 06 Jul 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952 U.S. Private Student Loan ABS Criteria (pub. 31 Jul 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868836 Related Research Navient Private Education Loan Trust 2016-A - Appendix https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876254 Additional Disclosures Dodd-Frank Rating Information Disclosure Form https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999084 ABS Due Diligence Form 15E 1 Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999084 Endorsement Policy https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20160204006616/en/ |
