DBRS Morningstar Assigns Provisional Ratings to Laurel Road Prime Student Loan Trust 2020-A

DBRS Inc. (DBRS Morningstar) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by Laurel Road Prime Student Loan Trust 2020-A:

-- $86,000,000 Class A-1FX Notes at AAA (sf)
-- $155,328,000 Class A-2FX Notes at AAA (sf)
-- $7,039,000 Class B-FX Notes at AA (sf)

The provisional ratings are based on a review by DBRS Morningstar of the following analytical considerations:

-- The transaction assumptions consider DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the Coronavirus Disease (COVID-19) pandemic, available in its commentary “Global Macroeconomic Scenarios: September Update,” published on September 10, 2020. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, which have been regularly updated. The scenarios were last updated on September 10, 2020, and are reflected in DBRS Morningstar’s rating analysis.
-- The assumptions consider the moderate macroeconomic scenario outlined in the commentary, with the moderate scenario serving as the primary anchor for current ratings. The moderate scenario remains predicated on a more rapid return of confidence and a steady recovery heading into 2021.
-- The transaction’s capital structure and the form and sufficiency of available credit enhancement.
-- The quality and credit characteristics of the student loan borrowers.
-- Structural features of the transaction that require the Class A-1FX Notes and Class A-2FX Notes to enter into full turbo principal amortization if certain performance triggers are tripped or if credit enhancement deteriorates.
-- Laurel Road’s capabilities with regard to originations and underwriting.
-- DBRS Morningstar has performed an operational review of Laurel Road and considers the entity to be an acceptable originator of student loans.
-- The ability of the Servicer to perform collections on the collateral pool and other required activities.
-- DBRS Morningstar has performed an operational review of the Higher Education Loan Authority of the State of Missouri (MOHELA) and considers the entity to be an acceptable servicer.
-- The legal structure and expected legal opinions that will address the true sale of the student loans, the non-consolidation of the trust, that the trust has a valid first-priority security interest in the assets and the consistency with the “DBRS Morningstar Legal Criteria for U.S. Structured Finance.”

The Notes will be backed by loans originated through the Laurel Road private student loan refinancing program (the Refinancing Loans). The fixed rate Class A-1FX Notes, Class A-2FX Notes, and Class B-FX Notes will be secured by a group of fixed rate Refinancing Loans.

Credit enhancement for Laurel Road 2020-A will consist of overcollateralization, subordination provided by the Class B-FX Notes for the benefit of the Class A-1FX Notes and Class A-2FX Notes, a reserve account for the Class A-1FX Notes and Class A-2FX Notes, a liquidity account for the Class B-FX Notes, and excess spread.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Private Student Loan Securitizations (November 20, 2019), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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