|[February 10, 2014]
Fitch Affirms SLC Private Student Loan Trust's Series 2006-A Ratings
NEW YORK --(Business Wire)--
Fitch Ratings has affirmed the ratings for the Student Loan Corporation
(SLC) Private Student Loan Trust Series 2006-A notes issued by SLC. The
Rating Outlook for the senior class A and subordinate class B notes have
been revised to Outlook Stable from Negative. The Negative Outlook for
the junior subordinate class C notes has been maintained. A detailed
list of rating actions follows at the end of this press release.
Fitch's Global Structured Finance Rating Criteria and Private Student
Loan Asset-Backed Securities (ABS (News - Alert)) Criteria were used to review the
SLC's 2006-A trust collateral consists of $1.096 billion of private
student loans originated under Citibank's CitiAssist private student
loan program and underwritten to specific guidelines. As of the December
2013 distribution date, the cumulative defaults are approximately 7% of
the initial pool balance. Given a pool factor of approximately 35% the
projected lifetime default ranges between 9% and 11% with remaining
defaults ranging between 6% and 9%.
The trust possesses third party insurance policies which are deemed to
provide limited credit enhancement for the notes. New Hampshire
Insurance Company insures 55% of the portfolio and is rated A/Stable by
Fitch. Royal & Sun Alliance USA insures 40% of the portfolio and is
rated A-/Rating Watch Negative by Fitch. The remaining 5% of the
portfolio is uninsured. The student loans are insured between 80% and
95% of the principal balance for each loan which has enhanced the
recovery on defaulted loans.
Credit Enhancement (CE)
CE is provided by overcollateralization (OC); the excess of the trust's
asset balance over the bond balance) and excess spread. Although the
total parity ratio (total assets over total liabilities) has been
increasing and is currently 101.42% as of December 2013, Fitch only
gives credit to the 101.0% parity cash release level. The senior notes
also benefit from the subordination of the Class B and Class C notes.
Senior parity has been rising and is 148.33%, and the subordinate parity
has risen as well to 126.02%.
The SLC 2006-A trust's credit enhancement levels are sufficient to
maintain the current ratings on the notes and revise the outlook to
Stable from Negative on the senior class A notes and subordinate class B
notes. The junior subordinate class C notes Outlook was maintained at
Negative due to continual deterioration in the collateral performance
and limited hard OC protection given the cash release.
Lquidity support will be provided by a debt service reserve fund which
is equal to the greater of 0.25% of the original pool balance and 1.00%
of the pool balance of the last day of related collection period.
SLC / Discover Bank, rated BBB/F2 Stable, is the master servicer and
administrator of the trust, and the subservicer, Discover Products Inc.,
is a wholly owned subsidiary of Discover Bank. Fitch believes the
servicing operations of Discover Products Inc. to be acceptable at this
As Fitch's base case default proxy is derived primarily from historical
collateral performance, actual performance may differ from the expected
performance, resulting in higher loss levels than the base case. This
will result in a decline in CE and remaining loss coverage levels
available to the notes and may make certain note ratings susceptible to
potential negative rating actions, depending on the extent of the
decline in coverage.
Fitch affirms and revises the Outlook for the following notes:
SLC Private Student Loan Trust 2006-A
--Senior Class A-4 at 'AAAsf'; Outlook to Stable from Negative;
--Senior Class A-5 at 'AAAsf'; Outlook to Stable from Negative;
--Subordinate Class B at 'AAsf'; Outlook to Stable from Negative;
--Junior Subordinate Class C at 'Asf'; Outlook Negative maintained.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Private Student Loan ABS Criteria' (Jan. 29, 2014);
--'Global Structured Finance Rating Criteria' (May 24, 2013).
Applicable Criteria and Related Research:
U.S. Private Student Loan ABS Criteria
Global Structured Finance Rating Criteria
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DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
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
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