News Column

Fitch Upgrades Sub Notes for SLM Student Loan Trust 2012-4; Outlook Stable

May 1, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the senior class notes at 'AAAsf', upgrades the subordinate notes to 'AAsf' from 'A+sf', and maintains the Stable Outlook for the senior and subordinate notes issued by SLM Student Loan Trust 2012-4. On March 24, 2014, Fitch took rating action to remove the ratings from the Negative Watch and assigned Stable Outlooks on all senior class notes, currently rated 'AAAsf', backed by collateral consisting of Federal Family Education Loan Program (FFELP) student loans.

KEY RATING DRIVERS

High Collateral Quality:

The 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. On March 24, 2014, Fitch affirmed the U.S. sovereign rating at 'AAA' and assigned a Stable Outlook.

Sufficient Credit Enhancement:

While both the senior and subordinate notes will benefit from overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread, the senior notes also benefit from subordination provided by the class B note. As of March 2014, total parity is 104.71% (4.50% CE) and senior parity is 108.80% (8.09% CE). The upgrade of the subordinate notes is due to the sufficient credit enhancement necessary to support the 'AAsf' rating. Cash is being released from the trust, given the specified OC amount, which is equal to the greater of 4.5% of the current adjustable pool balance and $15,000,000, has been achieved.

Adequate Liquidity Support:

Liquidity support is provided by a Debt Service Reserve Fund sized at the greater of 0.25% of the pool balance and 0.15% of the initial pool balance.

Acceptable Servicing Capabilities:

SLM Servicing Inc. (SLM) is responsible for day-to-day servicing of the trust. Fitch believes SLM is an acceptable servicer 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 actions:

SLM Student Loan Trust 2012-4:

--Class A notes affirmed at 'AAAsf'; Outlook Stable;

--Class B notes upgraded to 'AAsf' from 'A+sf'; Outlook Stable.

A comparison of the transaction's Representations, Warranties, and Enforcement Mechanisms (RW&Es) to those of typical RW&Es for student loans is available by accessing the reports and links below:

--'SLM Student Loan Trust 2012-4 - Appendix', dated May 11, 2012;

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended', dated May 11, 2012.

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

Applicable Criteria and Related Research:

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

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

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 -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708795

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

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

SLM Student Loan Trust 2012-4 -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=678956

Additional Disclosure

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 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.



Fitch Ratings

Primary Analyst

Jeffrey Prackup

Director

+1-212-908-0839

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Secondary Analyst

Paul Jiang

Analyst

+1-212-908-9120

or

Committee Chairperson

Tracy Wan

Senior Director

+1-212-908-9171

or

Media Relations

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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