2008-04-25 23:03:16 -
- Fitch Ratings has confirmed the following ratings for SLM Student Loan Trust 2005-7:
--$251,463,010.61 Class A-2 Floating Rate Student Loan-Backed Notes 'AAA';
--$266,000,000.00 Class A-3 Floating Rate Student Loan-Backed Notes 'AAA';
--$307,339,000.00 Class A-4 Floating Rate Student Loan-Backed Notes 'AAA';
--$180,000,000.00 Class A-5 Reset Rate Student Loan-Backed Notes 'AAA';
--$47,052,000.00 Class B Floating Rate
Student Loan-Backed Notes 'AAA'.
Fitch has confirmed the above-referenced student loan-backed notes, given Sallie Mae Inc.'s intention to remarket the class A-3 notes from a fixed interest rate to the three-month London Interbank Offered Rate (LIBOR) plus 1.35%. The class A-3 notes are being converted to floating rate notes and therefore, will not be remarketed again.
The transaction has a senior subordinate structure with five classes of notes currently outstanding. Interest on the class A-2, A-4, A-5 and class B notes are indexed to three-month LIBOR plus a spread and are payable quarterly. Additionally, the class A-5 notes are reset rate notes with the first expected remarketing to occur on July 25, 2013.
Initially, the class A-3 notes paid a fixed interest rate and will be remarketed as floating rate notes indexed to three-month LIBOR plus 1.35%. Upon the remarketing, SLM will deposit $17.1 million into a newly established Spread Supplement Account to benefit only the class A-3 notes. This amount is available to pay interest in excess of the original failed remarketing rate of 3-month LIBOR + 0.75%.
Credit enhancement for the trust consists of the reserve account, the capitalized interest account, and excess spread. The reserve account is sized at 25 basis points (bps) of the sum of the current student loan pool balance plus accrued interest, with a floor of $2,280,587 or 15 bps of the original pool balance. In addition, the class A notes benefit from 4.47% subordination provided by the class B notes.
The collateral securing the notes are 100% consolidation loans originated prior to January 1, 2006 under the Federal Family Education Loan Program (FFELP). The loans are guaranteed to at least 98% of principal and accrued interest by an eligible guarantor(s) and are reinsured by the U.S. Department of Education up to the same amounts.
The transaction is performing within Fitch's expectations from a default and delinquency perspective. The trust is currently releasing excess cash while maintaining a total trust parity ratio of 100%.
Sallie Mae, Inc. acts as servicer for the loan portfolio. Fitch rates Sallie Mae, Inc's FFELP Servicing capabilities as 'Proficient Plus'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings, New York
Gary Santo, +1-212-908-9172
Melvin Zhou, +1-212-908-0503
Sandro Scenga, +1-212-908-0278 (Media Relations)
