Navient Private Education Loan Trust is preparing to issue $516 million in asset-backed securities issued from a collateral pool of seasoned private student loans that had been originated under various loan programs that Sallie Mae administered.
More specifically, the seasoned private student loans backed by a pool of balance sheet loans, Shenandoah Non Trust loans and loans that had originally backed three transactions, the SLM 2011-A, 2011-B, 2014-A and Navient 2014-CT trusts.
Navient Credit Finance, Shenandoah Funding and VL Funding sold the loans into the trust. Aside from sponsoring the deal, Navient Solutions is also the servicer, administrator and loan representation provider, according to DBRS Morningstar.
Moody’s Investors Service noted that RBC Capital Markets, ATLAS SP Securities, Barclays Capital, BofA Securities and J.P.Morgan Securities are initial note purchasers from the deal. The trust will issue notes from three tranches, comprised of class A and B notes, according to the rating agencies. All of the notes have the same legal final maturity date of March 15, 2072.
Moody’s cited several strengths to the deal, including the deal’s sequential note repayment structure and collateral with 168 months of seasoning. The loans are already past their peak default periods, which each typically occur three to five years after a borrower enters repayment. Moody’s noted that the deal has 25.46% in initial overcollateralization, excluding the reserve accounts, and 17.34% of subordination for the class A notes.
The deal does have a couple of drawbacks, however, and actually one is that the loans have a WA remaining term of 1689 months. Significant increases in loan term extensions and borrower modifications accounted for this, Moody’s said.
Moody’s will assign ‘Aaa’ to the class A notes, benchmarked to the Secured Overnight Financing Rate (SOFR), while S&P expects to assign ‘AAA’ to the SOFR-benchmarked class A notes, and ‘AA’ to the class B notes.
All of the notes have a legal final maturity date of March 15, 2072.
