TEXT-Fitch cuts the ratings on 3 SLM Private Credit Student Loan Trusts

Tue Dec 18, 2012 5:49pm EST

Dec 18 - Fitch Ratings has downgraded all senior, subordinate and junior
subordinate notes from three SLM Private Credit Student Loan Trusts. In
addition, Fitch removes them from Rating Watch Negative and assigns a Negative
Outlook for all the notes. Fitch used its 'Global SF Criteria' and 'U.S. Private
SL ABS Criteria' to review the transaction. A detailed list of ratings actions
follows at the end of this press release. 

In July 2012, Fitch placed SLM 2003-A, 2003-B and 2003-C trusts on Rating Watch 
Negative due to concerns that total parity for each of the trusts dropped below 
100%, leaving the trusts under-collateralized. Additionally, excess spread was 
compressed as a result of higher coupon cost on the auction rate notes, which 
are paying at the maximum rate causing a higher bond interest expense to the 
trust. 

The downgrades reflect insufficient loss coverage multiples to support existing 
ratings. Fitch estimates the remaining defaults to range approximately from 8% 
to 10% depending on the trust. Losses have been accumulating at a faster pace 
than anticipated and have resulted in erosion of total parity over the years. In
addition, total parity levels for all three trusts have decreased below par to 
99.41%, 98.12%, and 97.71%, respectively. With the higher trust expenses, excess
spreads are insufficient to cover for the realized loss incurred in the trusts, 
resulting in the reduction of the total parity in each trust. 

The Negative Outlook on the non-distressed ratings is driven by the declining 
total parities and high default levels in excess of Fitch's initial 
expectations. In addition, the Outlooks reflect Fitch's negative view on the 
private student loan sector in general. 

Fitch also applied a Recovery Estimate (RE) to classes rated 'CCC' or below, 
representing Fitch's calculation of expected principal recoveries as a 
percentage of current note principal outstanding. Each of the notes rated 'CCC' 
or below was assigned an RE respectively, given Fitch's calculation of expected 
net recoveries and principal balance of the notes as of the latest reporting 
period.

Fitch projected future losses and derived loss coverage multiples based on the 
latest performance data. The projected net loss amounts were compared to 
available credit enhancement to determine the loss multiples appropriate for 
each rating category. Credit enhancement consists of a combination of excess 
spread, overcollateralization, and subordination. 

The collateral securing the notes are private student loans originated to 
undergraduate, graduate, law, Med and MBA students under the Signature and EXCEL
programs. The private student loans are intended to assist individuals in 
financing their undergraduate or graduate education beyond FFELP limits. 

Fitch downgrades the following ratings, removed them all from Negative Watch, 
and assigned a Negative Outlook and/or RE as indicated: 

SLM Private Credit Student Loan Trust 2003-A: 

--Class A-2 to 'Asf' from 'AAAsf'; Outlook Negative;

--Class A-3 to 'Asf' from 'AAAsf'; Outlook Negative;

--Class A-4 to 'Asf' from 'AAAsf'; outlook Negative;

--Class B to 'BBBsf' from 'AAsf'; Outlook Negative;

--Class C to 'CCCsf' from 'BBB-sf'; RE30%. 

SLM Private Credit Student Loan Trust 2003-B: 

--Class A-2 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class A-3 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class A-4 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class B to 'BBBsf' from 'AAsf'; Outlook Negative;

--Class C to 'CCCsf' from 'BBB-sf'; RE20%.

SLM Private Credit Student Loan Trust 2003-C: 

--Class A-2 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class A-3 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class A-4 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class A-5 to 'A-sf' from 'AAAsf'; Outlook Negative;

--Class B to 'BBBsf'; from 'AAsf'; Outlook Negative;

--Class C to 'CCCsf' from 'BBB-sf'; RE25%.


Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been 
compensated for the provision of the ratings. 

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