Refinancings of loans, primarily extended to high-quality borrowers who obtained graduate degrees and are working in high-paying professions, will secure a $555.9 million securitization.
The Navient Refinance Loan Trust, 2026-B, will sell notes through three tranches of class A, B and C notes, and the class A notes contains most of the debt in the deal, $521.8 million, according to Morningstar DBRS.
Navient Refinance Solutions is sponsoring the deal, which is expected to close around June 24 and includes Atlas SP Securities, Bank of America Merrill Lynch, Barclays and JP Morgan Securities as the deal managers.
The transaction begins repaying noteholders on August 15, and all classes have a final maturity date of June 15, 2056, according to DBRS.
Navient will follow a sequential repayment structure, and no subordinate classes will receive any principal until the most senior outstanding class is paid in full.
This creates subordination in the structure, which gets additional credit support from a turbo feature. Under that feature all remaining funds will be dedicated to paying principal on the most senior outstanding class of notes until the specified overcollateralization amount is reached. That amount equals $8.6 million and 5.90% of the current pool balance, DBRS said.
The collateral pool is vast, with 574,885 fixed-rate loans and a little more than two million variable-rate loans, according to DBRS. By the cutoff date, the borrowers in the pool had a weighted average (WA) original FICO score of 773 at origination. Borrowers had a WA income of $208,999, according to the rating agency.
KBRA finds that 52.8% of the underlying loans were made to borrowers that obtained a graduate degree, and these loans default at much lower rates than those made to undergraduate students.
About 46.8% of the deal's graduate school borrowers have a medical degree and a WA income of about $354,894. Law school graduates and MBA degree holders account for 14.8% and 12.9% of the pool, respectively, DBRS said, adding that they earn $246,671 and $213,126, respectively, on a WA basis.
DBRS assigns ratings of (P) AAA (sf), (P) AA (sf), and (P) A (sf) to classes A, B and C, respectively.
Asset Securitization Report's deal database finds that Moody's assigns ratings of AAA, AA, and A to classes A, B and C, respectively.
