In what is proving to be a boom year in private student-loan ABS despite pandemic-related stresses, Navient Corp. is planning its third private education loan trust transaction of 2020 with shorter expected maturities.
According to data filed with the Securities and Exchange Commission, Navient on Tuesday sold $252 million in Class A-1A floating-rate notes at 100 basis points wide of swaps and a $300 million floating-rate tranche also at a 100 basis-point spread to one-month Libor.
The notes have a weighted-average life of 3.74 years, according to Finsight.com, compared to 5.44 years for the senior notes for each of two prior non-guaranteed private SLABS deals from the Navient trust this year.
The deal is the 12thoverall for Navient, which also markets private-loan refinancings in the ABS market as well as legacy FFELP loans insured through the former Federal Family Education Loan Program.
The $604 Navient Private Education Loan Trust 2020-I includes 71,153 loans (one of Navient’s largest pools compared to recent transactions) from 57,063 borrowers on accounts with an average outstanding balance of 11,801 on rates of 6.45% – a lower rate that recent Navient ABS pools.
The borrowers have made payments on average for the past 95 months, with remaining terms averaging 161 months (or 13.4 years). The average borrower current FICO is 741, in line with prior Navient securitizations.
A vast majority (96.4%) of the loans are from borrowers who attended four-year schools, consisting of variable-rate terms indexed either to Prime or to one-month Libor. About 77% are co-signed loans, but only 8.5% are consolidation loans.
According to presale reports from S&P Global Ratings and DBRS Morningstar, the loans were acquired from SLM Private Education Loan Trusts 2011-C and 2013-B, two deals that were recently called. Navient is the former servicing arm of Sallie Mae that has been previously spun off from the student lender.
The capital stack in the 2020-I trust includes $552 million in Class A-1A and A-1B notes consisting of fixed- and floating-rate tranches. Each has preliminary triple-A ratings from S&P and DBRS Morningstar. Navient is also marketing an AA-rated Class B tranche totaling $52 million.
Only 3.7% of the loans are in forbearance, and another 3.1% in deferment. Reports state that 86.4% have been in repayment for more than three years.
S&P has an expected default rate 8.8%-9.8%, which is slightly higher than previous Navient deals due to underlying uncertainties of the near-term economic impact of the ongoing COVID-19 outbreak. S&P’s expected cumulative net credit-loss range is 6.5%-7.5% of the initial pool balance.
