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TMCNet:  Fitch Maintains Rating Watch on SLM 2012-8 Sr. Note; Affirms Sub Note

[December 04, 2013]

Fitch Maintains Rating Watch on SLM 2012-8 Sr. Note; Affirms Sub Note

NEW YORK --(Business Wire)--

Fitch Ratings maintains the Negative Rating Watch on the senior note currently rated 'AAAsf' issued by SLM Student Loan Trust 2012-8 and affirms the subordinate note at 'A+sf' with a Stable Outlook.

On Oct. 16, Fitch placed 766 'AAAsf' rated tranches of U.S. FFELP student loan ABS (News - Alert) on Rating Watch Negative following the revision of the U.S. sovereign rating on Oct. 15. For further details, see the press release dated Oct. 16, 2013, 'Fitch Places 'AAAsf' Rated U.S. FFELP Student Loan Tranches on Rating Watch Negative'.

KEY RATING DRIVERS

High Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest.

SUFFICIENT CREDIT ENHANCEMENT: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of September 2013, total parity is 103.10% (3.01% CE) and senior parity is 106.32% (5.94% CE). Cash is not being released as the trust has not yet reached the target OC release level of the greater of 4.5% of the adjusted pool balance and $15,000,000.

ADEQUATE LIQUIDITY SUPPORT: Liquidity support is provided by a reserve account and a capitalized interest account. The reserve is sized equal to the greater of 0.25% of the pool balance, and $2,235,626. The current balance of the capitalized interest account is $21,000,000, and will be released based on a pre-determined schedule.

ACCEPTABLE SERVICING CAPABILITIES: Sallie Mae Inc., as servicer, and PHEAA as subservicer are responsible for servicing the trust. Fitch views both Sallie Mae and PHEAA as acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has taken the following rating action:

SLM Student Loan Trust 2012-8:

-- Class A note Rating Watch Negative maintained;

-- Class B note affirmed at 'A+sf'; Outlook Stable.

A comparison of the transacion's representations, warranties, and enforcement mechanisms (RW&Es) to those of typical RW&Es for FFELP asset-backed securities is available in the presale appendix. This presale appendix and Fitch's special report on "Representations, Warranties, and Enforcement Mechanisms on Global Structured Finance Transactions," may be accessed via the links provided below.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria' (May 17, 2013);

--'SLM Student Loan Trust 2012-8 - Appendix' (Nov 26, 2012);

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions - Amended' (April 17, 2012).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria - Effective Apr. 7, 2011 to Apr. 3, 2012

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=616766

SLM Student Loan Trust 2012-8 -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695734

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=810585

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE '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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


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