Navient 2021-F prepares to issue nearly $ 1 billion in student loan ABS

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Navient Solutions, a mainstay of the student loan asset-backed securities industry, plans a $ 991.3 million deal through the Private Education Refi Loan Trust, 2021-F. The deal is expected to be finalized in about a week.

The Navient ABS trust will provide investors with notes secured by refinanced fixed and floating rate student loans from Earnest Operations, LLC, a subsidiary of Navient, according to DBRS Morningstar, which plans to value the notes.

Earnest has funded over $ 15 billion in refinanced student loans to over 170,000 borrowers. Serious operations will also serve as the subcontractor of the transaction.

The entire pool consists of loans taken out by borrowers who have already graduated and have a job, which reduces the risk of default compared to borrowers who have not completed their education. DBRS notes that as of August 11, the deadline, the weighted average period (WA) since borrowers had graduated was 76 months.

About 55.6% of the underlying borrowers of Navient 2021-F have a graduate degree. Of the number of graduate degree holders, 33.2% have a medical degree and WA income of approximately $ 238,687. DBRS notes that less than one percent of physicians and dentists are unemployed, citing data from the US Bureau of Labor Statistics and US News & World Report. Unemployment rates are expected to remain low as long as the health sector grows, the rating agency said.

As for the remainder of the holders of a professional diploma, approximately 14.0% have a JD and WA income of approximately $ 180,430; and about 13.7% hold an MBA, with WA income of $ 150,344, according to DBRS.

In addition to the promising outlook for borrowers, the borrowers of Navient 2021-F present a high credit quality. The original borrowers had an original WA FICO score of 767 and WA income of $ 131,458.

Navient 2021-F will operate with a sequential payment structure and turbo function to provide additional credit support at the start of the transaction. After paying the senior transaction costs, interest on the Notes and certain deficiencies, explains DBRS, the trust will use the remaining available funds to repay the principal of the Class A Notes until the payments reach an amount of oversizing specified. This amount will be equal to the greater of 3.5% of the current account balance or $ 15.1 million.

With expected ratings of “AAA” on the $ 945.7 million Class A tranche and “AA” on the $ 45.6 million Class B tranche, the ratings have a legal final maturity date. February 2070.

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