DBRS Morningstar Assigns Provisional Ratings to Navient Private Education Loan Trust 2023-B

DBRS, Inc. (DBRS Morningstar) assigned provisional ratings to the following classes of notes to be issued by Navient Private Education Loan Trust 2023-B (Navient 2023-B):

-- $296,000,000 Fixed Rate Class A-1A Notes rated AAA (sf)*
-- $100,000,000 Floating Rate Class A-1B Notes rated AAA (sf)*
-- $120,000,000 Fixed Rate Class B Notes rated AA (sf)

*The aggregate initial principal balance of the class A-1 notes will be equal to $396,000,000, of which the issuing entity expects that the initial principal balance of the class A-1A notes, if issued, will be an amount not less than $100,000,000 and not more than $296,000,000 and the class A-1B notes will be an amount not less than $100,000,000 and not more than $396,000,000.

The provisional ratings are based on a review by DBRS Morningstar of the following analytical considerations:
-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios for Rated Sovereigns: June 2023 Update,” published on June 30, 2023. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.
-- Transaction capital structure, proposed ratings, and form and sufficiency of available credit enhancement.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors in accordance with the terms of the Navient 2023-B transaction documents.
-- The sequential-pay structure.
-- Structural features of the transaction that require the Class A Notes to enter into full turbo principal amortization under certain circumstances.
-- The quality and credit characteristics of the student loans and underlying borrowers.
-- The ability of Navient Solutions, LLC, as the servicer, to perform collections on the collateral pool and other required activities.
-- The legal structure and expected presence of legal opinions that will address the true sale of the student loans, the nonconsolidation of the trust and that the trust has a valid first-priority security interest in the assets, and the consistency with DBRS Morningstar’s “Legal Criteria for U.S. Structured Finance.”

The trust will consist of seasoned private student loans that were made and underwritten under various loan programs administered by the former Sallie Mae, Inc.

DBRS Morningstar’s credit rating on the securities listed below addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents.

DBRS Morningstar’s credit rating does not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations.

DBRS Morningstar’s long-term credit ratings provide opinions on risk of default. DBRS Morningstar considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

ESG CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

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/416784/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (July 4, 2023).

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

The principal methodology is Rating U.S. Private Student Loan Securitizations (October 28, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria: https://www.dbrsmorningstar.com/research/404500/rating-us-private-student-loan-securitizations

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

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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