Fitch Ratings has been notified of the expected subservicer migration from Citibank, N.A. to Discover Products, Inc. in relation to private student loans in SLC Private Student Loan Trust 2006-A and SLC Private Student Loan Trust 2010-A. Based on the information presented, Fitch does not expect the servicing migration to have a materially adverse effect on the ratings of the student loan notes issued from the above trusts.
Discover Financial Services (DFS) completed the acquisition of The Student Loan Corporation (SLC) on Dec. 31, 2010. Discover Bank (Discover), a wholly owned subsidiary of DFS, acquired SLC in a merger transaction, with SLC surviving the merger as a wholly owned subsidiary of Discover. As a result of the merger, Discover acquired the beneficial interests in securitization trusts holding the private student loans issued out of the SLC Private Student Loan Trust 2006-A, and a private securitization transaction issued out of the SLC Private Student Loan Trusts 2010-A and 2010-B (collectively, the loans).
Certain servicing functions will be transferred to Discover for the private student loans held in SLC Private Student Loan Trust 2006-A and SLC Private Student Loan Trust 2010-A. After the servicer migration is completed, primary subservicing will be handled by Discover Products, Inc, while ancillary sub-subservicing duties will be handled by Citibank, N.A. and SLC.
After reviewing the migration plan and visiting Discover's operation center in Salt Lake City, Utah, Fitch determined that the migration will not have a materially adverse impact on the servicing capabilities of the trusts. Fitch also believes Discover to be a capable servicer of private student loans. The migration plan will be managed in stages, beginning with a pool of unsecuritized loans which started in April 2012. The servicing function will also be transferred in stages beginning with customer service, collection and recovery activities. Transferred loans will remain on their existing servicing platform throughout the migration. Servicing migration of trust loans is expected to be completed before Nov. 30, 2012. Fitch will monitor the process and track the performance as the migration moves forward.
While analyzing the performance of the unencumbered loans after migration, Fitch noted that delinquencies rose in June 2012. However, this rise is mostly due to seasonality factors, and is comparable to rises in delinquencies in loans still in the 2006-A and 2010-A trusts.
Fitch currently rates the notes as follows:
SLC Private Student Loan Trust 2006-A
--A-4 'AAAsf'; Outlook Negative;
--A-5 'AAAsf'; Outlook Negative;
--B-1 'AAsf'; Outlook Negative;
--C-1 'Asf'; Outlook Negative.
SLC Private Student Loan Trust 2010-A
--A-1 'AAAsf'; Outlook Stable.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Private Student Loan ABS Criteria' (Jan. 31, 2012);
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Fitch Clarifies Policy for Structured Finance Rating Confirmations' (Jan. 13, 2009); and
--'Fitch Clarifies Policy on Student Loan ABS Confirmation Requests' (May 8, 2009).
Applicable Criteria and Related Research:
U.S. Private Student Loan ABS Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=667570
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
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Contacts:
Fitch Ratings
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Harry Kohl, +1-212-908-0837
Analyst
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or
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Tracy Wan, +1-212-908-9171
Senior Director