DBRS Morningstar Finalizes Provisional Ratings on SMB Private Education Loan Trust 2021-C

DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes (the Notes) issued by SMB Private Education Loan Trust 2021-C (SMB 2021-C):

-- $223,200,000 Fixed Rate Class A-PT Notes rated AAA (sf)
-- $84,400,000 Floating Rate Class A-1 Notes rated AAA (sf)
-- $161,800,000 Floating Rate Class A-2 Notes rated AAA (sf)
-- $32,400,000 Fixed Rate Class B Notes rated AA (high) (sf)
-- $36,200,000 Fixed Rate Class C Notes rated A (high) (sf)
-- $26,900,000 Fixed Rate Class D Notes rated BBB (sf)
-- $246,200,000 Exchangeable Class A-PL Notes* rated AAA (sf)

*The Class A-1 Notes and Class A-2 Notes are exchange notes and may be exchanged for the Class A-PL exchangeable notes. Interest payments on the exchangeable notes represent the weighted average of the interest payments on the classes of exchange notes included in the corresponding exchangeable combination.

The ratings on the Notes are based on DBRS Morningstar’s review of the following considerations:
-- The transaction assumptions consider DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the Coronavirus Disease (COVID-19), available in its commentary “Global Macroeconomic Scenarios: March 2021 Update,” published on March 17, 2021. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, that have been regularly updated. The scenarios were last updated on March 17, 2021, and are reflected in DBRS Morningstar’s rating analysis.
-- The assumptions consider the moderate macroeconomic scenario outlined in the commentary, with the moderate scenario serving as the primary anchor for the current ratings. The moderate scenario factors in increasing success in containment during the first half of 2021, enabling the continued relaxation of restrictions.
-- The transaction’s form and sufficiency of available credit enhancement.
-- Overcollateralization, note subordination, reserve account amounts, and excess spread create credit enhancement levels and liquidity that are commensurate with the ratings.
-- Transaction cash flows are sufficient to repay investors under all AAA (sf), AA (high) (sf), A (high) (sf), and BBB (sf) stress scenarios in accordance with the terms of the SMB 2021-C transaction documents.
-- The quality and credit characteristics of the student loans and underlying borrowers.
-- Sallie Mae Bank’s (SMB) capabilities with regard to originations and underwriting.
-- DBRS Morningstar has performed an operational review of SMB’s origination platform and has determined the bank to be an acceptable student loan originator.
-- The ability of the Servicer to perform collections on the collateral pool and other required activities.
-- DBRS Morningstar has performed an operational review of SMB as the servicer and considers the entity to be an acceptable servicer of private student loans.
-- The legal structure and legal opinions that address the true sale of the student loans, the nonconsolidation of the trust, that the trust has a valid first-priority security interest in the assets, and consistency with DBRS Morningstar's “Legal Criteria for U.S. Structured Finance.”

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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

The principal methodology is Rating U.S. Private Student Loan Securitizations (November 5, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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

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

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at [email protected].

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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