Navient Solutions is remodeling its securitization shelf for private education loan refinancings into a conveyor belt.
For the third time since June 1, well into the coronavirus pandemic period, Navient has set out with an asset-backed bond offering secured by receivables of professional and post-graduate student-loan refinancings underwritten by its Earnest Operations subsidiary.
Navient Private Education Refi Loan Trust 2020-F has a collateral pool of fixed-rate loans with a combined principal balance of $800.79 million, backing two classes of notes. The $724.7 million Class A notes have preliminary AAA ratings from both S&P Global Ratings and DBRS Morningstar, according to presale reports.
The deal is the 57th private education loan ABS deal sponsored by Navient (which also securitizes private loan originations for undergraduates), and the 23rd since its spinoff from Sallie Mae (NASDAQ: SLM) in 2014.
Navient acquired Earnest in 2017, in a bid to compete against private student-loan refinance specialists such as SoFi and CommonBond, which target borrowers in high-earning, advanced-degree professions with low-interest loans to consolidate and refinance student-loan debt accumulated during their post-graduate studies.
Earnest also offers in-school student loans, but the 2020-F loan pool consists entirely of refinanced loans to borrowers with a weighted average FICO of 763, incomes of $133,761 and monthly free cash flow of $4,363.
The financed loans (96% of which are in active repayment) have WA original terms of 144 months and a WA coupon of 4.78%.
S&P has a base-case default rate assumption of 3%, an increase from 2.75% from the previous Navient refi loan deal it rated. S&P cited the continuing risks from the COVID-19 pandemic, which has led to 3.9% of the loans in the pool being placed into forbearance.
Barclays, Bank of America Merrill Lynch, JPMorgan, RBC and Credit Suisse are underwriters on the transaction.
