Navient Student Loan Trust 2019-1 Notes Assigned Preliminary Ratings

OVERVIEW
  • Navient Student Loan Trust 2019-1's issuance is an ABS transaction backed by a pool of student loans that are at least 97% reinsured by the U.S. federal government.
  • We assigned our preliminary ratings to the class A-1, A-2, and B notes.
  • The preliminary ratings reflect our view of the transaction's payment structure and legal structure, and our expectation of timely interest and principal payments, among other factors.
 
NEW YORK (S&P Global Ratings) Jan. 9, 2019--S&P Global Ratings today assigned 
its preliminary ratings to Navient Student Loan Trust 2019-1's student 
loan-backed notes series 2019-1 (see list).

The note issuance is an asset-backed securities (ABS) transaction backed by a 
pool of student loans that are at least 97% reinsured by the U.S. federal 
government.

The preliminary ratings are based on information as of Jan. 9, 2018. 
Subsequent information may result in the assignment of final ratings that 
differ from the preliminary ratings.

The preliminary ratings reflect:
  • The transaction's expected initial class A-1 and A-2 parities of 425.6% and 103.9%, respectively. Class A-1 parity is defined as the percentage of total assets divided by the class A-1 note's amount. Class A-2 parity is defined as the percentage of total assets divided by the sum of the class A-1 and A-2 notes' amounts.
  • The transaction's expected initial total parity of 102.4%. The total parity is defined as the percentage of total assets divided by the sum of the class A-1, A-2, and B notes' amounts.
  • The approximate 1.42% class B note subordination available for the class A-1 and A-2 notes. Subordination is defined as the class B note balance divided by the total note balance.
  • The reserve account, which equals 1.25% of the initial pool balance ($9,457,026) at closing and must be maintained at 1.25% of the current pool balance until September 2019, when the reserve requirement decreases to 1.00% of the current pool balance. The reserve requirement decreases again in July 2029 to 0.25% of the current pool balance. The reserve has a floor equal to 0.10% of the initial pool balance ($756,562).
  • The transaction's payment structure, which builds overcollateralization to the greater of 2.35% of the current adjusted pool balance and $3.8 million (0.50% of the initial pool balance) from 2.35% at closing. Overcollateralization is defined as the excess of the pool balance and the reserve over the total notes, divided by the pool balance plus the reserve balance.
  • Our view that the likelihood of the payment structure changing because of a nonmonetary event of default is sufficiently remote, allowing for different preliminary ratings on the class A-1 and A-2 notes.
  • The U.S. federal government's reinsurance of at least 97% of the loans' principal and interest.
  • Our expectation of timely interest and principal payments made by the legal final maturity date in the cash-flow runs that simulated our 'AAA', 'AA+', and 'A' rating credit stress and liquidity scenarios.
  • A credit stability scenario analysis, which indicates that under moderately stressful economic conditions, the preliminary 'AAA (sf)' and 'AA+ (sf)' ratings would not decline more than one and three rating categories in the first and third years, respectively, and the 'A (sf)' rating would not decline more than two and three rating categories in the first and third years, respectively.
  • The transaction's legal structure.