DBRS Finalizes Provisional Ratings on Nelnet Private Education Loan Trust 2016-A

DBRS, Inc. (DBRS) has today finalized its provisional ratings on the following classes issued by Nelnet Private Education Loan Trust 2016-A (NPELT 2016-A):

-- Series 2016-A, Class A-1A rated AA (low) (sf)
-- Series 2016-A, Class A-1B rated AA (low) (sf)
-- Series 2016-A, Class B rated BBB (sf)

The finalized ratings are based on DBRS’s review of the following analytical considerations:

-- The transaction’s form and sufficiency of available credit enhancement.
-- The quality and credit characteristics of the student loan borrowers.
-- Structural features of the transaction that require the Class A Notes to enter into full turbo principal amortization if certain performance triggers are breached or if credit enhancement deteriorates.
-- The ability of Nelnet Servicing, LLC (d/b/a Firstmark Services) to perform collections on the collateral pool and other required activities.
-- The legal structure and expected legal opinions that will address the true sale of the student loans, the non-consolidation of the trust, that the trust has a valid first-priority security interest in the assets and consistency with the DBRS “Legal Criteria for U.S. Structured Finance” methodology.

The collateral backing the Notes primarily consists of variable-rate and fixed-rate private student loans that were originated and underwritten by various lenders and purchased by Nelnet. Inc. (including its affiliates). The majority of the trust student loans (approximately 54% by outstanding principal balance as of the Statistical Cut-Off Date) include loans originated through CommonBond, Inc. and sold to Nelnet, Inc. pursuant to a forward flow purchase agreement, which began in early 2015. Approximately 19% of the securitization pool consists of seasoned private student loans originated by Nelnet, Inc. under its various legacy private student loan programs. Approximately 15% of the trust student loans were originated by Graduate Leverage, LLC in 2007 and 2008 and sold to Nelnet, Inc. by a third-party investor in 2013. Approximately 12% of the trust student loans were originated in 2015 and 2016 by Union Bank and Trust Company and sold to Nelnet, Inc. pursuant to a guaranteed purchase agreement. The loans originated by Union Bank, otherwise called U-Fi Loans, were the result of marketing efforts of Nelnet Consumer Finance, Inc. The Nelnet 2016-A trust will not include any federally funded or guaranteed student loans.

Nelnet 2016-A uses a traditional pass-through structure with credit enhancement consisting of overcollateralization, subordination provided by the Class B Notes for the benefit of the Class A Notes, excess spread and a Reserve Fund.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating U.S. Private Student Loan Securitizations, which can be found on our website under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

Please see the attached appendix for additional information regarding sensitivity of assumptions used in the rating process.

The full report providing additional information and analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.