Navient Private Education Refi Loan Trust, 2022-A, is preparing to issue $730.9 million of asset-backed securities, in a deal secured by a pool of private student loans.

BofA Securities, Barclays Capital, Credit Suisse Securities, JP Morgan Securities and RBC Capital Markets will be the first purchasers of notes in the transaction.

Navient Private Education Trust, 2022-A, will issue the notes under a relatively short-term, sequential fee structure, according to a pre-sale report from Moody’s Investors Service. The agency plans to assign “Aaa” ratings to fixed-rate Class A tickets.

In terms of the remaining term of the collateral pool, the underlying loan pools have 154 months remaining, on a weighted average (WA) basis. That compares to remaining terms of 160 to 190 months for other ABS deals backed by private student loans, Moody’s said.

The credit enhancement for Class A tickets will increase over time as the transaction will use the excess spread to turbo the tickets until the Overcollateralization (OC) amount reaches a specified amount. This amount will be the greater of 5.65% of the outstanding pool balance and $11.5 million.

Moody’s notes that high-quality private student loans, particularly those issued to borrowers refinancing outstanding debt, secured the transaction. On a weighted average basis, borrowers in the underlying pool have a credit score of 764, annual verified income of $134,757 and monthly free cash flow of $4,721.

However, not all aspects of the agreement constitute credit strength. Moody’s noted that Naviet Private Education Trust, 2022-A, has limited loan performance data. Earnest Operations, an indirect majority-owned subsidiary of Navient Corp., originated all of the loans in the deal, and nearly all of them were created after December 2020. Navient also made significant changes to its guidelines NaviRefi loan underwriting from December 2020 through April 2021, bringing them more in line with Earnest Operations lending guidelines.

As a result, data on repayments, losses and delinquencies do not cover a full economic cycle, barely enough to inform the rating agency’s expectations.

The loans underpinning Navient Private Education Trust, 2022-A are concentrated in medical, business and legal, whose borrowers live in major metropolitan areas.

“We have seen a sharp increase in the use of forbearance in refi agreements, which typically have high exposure to healthcare borrowers,” Moody’s said. “Elective medical procedures were temporarily suspended during the pandemic and borrowers were unable to work.”