Revenue from student loan refinancings will secure $543 million in asset-backed securities from the Navient Refinance Loan Trust, series 2025-B.
Navient Refinance will issue the fixed-rate notes through three tranches of class A, B, and C notes, according to Moody's Ratings and Morningstar | DBRS.
Navient Refinance 2025-B is expected to close on September 26 and will repay noteholders sequentially. All three note classes have a legal final maturity date of Sept. 15, 2055. The deal will not allocate any principal to the subordinate classes until the most senior outstanding class is paid in full.
ATLAS SP Securities, Bank of America Merrill lynch, Barclays, J.P. Morgan Securities and RBC Capital Markets, are managing the deal, according to Asset Securitization Report's deal database.
Also, Navient incorporates a full turbo feature, where all the remaining available funds—after paying senior transaction fees, note interest and certain shortfalls—will be used to pay principal on the more senior of outstanding note classes until the deal reaches a specified overcollateralization amount. If the deal reaches that amount, the most senior outstanding class of notes can revert to full turbo mode if the note factor is equal to or less than 10%.
At closing, the classes A, B and C notes benefit from total initial hard credit enhancement levels of 8.07%, 5.66% and 1.52%, respectively, according to Moody's. That credit enhancement could increase for the most senior outstanding classes of notes, however, as the notes repay investors sequentially over time.
The rating agencies noted that the class A notes account for the bulk of the assets, with $507 million outstanding, or 92.18% of the deal.
Earnest Operations, an online lending platform, is a subsidiary of Navient, and offers loans to borrowers with undergraduate degrees who demonstrate that they have a strong ability to repay their debts.
Loans underpinning the securities were extended to high-quality borrowers, too, according to the rating agencies. Borrowers had an original FICO score of 763, which was 14 points higher than that of the previous deal from the platform, the NAVRL 2025-A. Also, borrowers have annual income of $167,736, and monthly free cash of $5,781.08, DBRS said.
DBRS assigns ratings of AAA, AA and A to the A, B and C classes, while Moody's assigned Aaa to the class A notes.
