DBRS Morningstar Confirms Ratings on Earnest Student Loan Program 2016-A LLC

DBRS, Inc. (DBRS Morningstar) confirmed the ratings on Earnest Student Loan Trust 2016-A as follows:

-- Class A-1 Notes at AAA (sf)
-- Class A-2 Notes at AAA (sf)
-- Class B Notes at AA (high) (sf)

The rating confirmation is based on DBRS Morningstar’s review 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.
-- Transaction capital structure, current ratings, and form and sufficiency of available credit enhancement.
-- The transaction parties’ capabilities with regard to origination, underwriting and servicing.
-- The credit quality of the collateral pool and historical performance as of September 2020.
-- The collateral performance to date and DBRS Morningstar's assessment of future performance, including upward revisions to the initial base-case default assumption consistent with the expected unemployment levels in the moderate scenario.

-- The transaction is a securitization of U.S. student loan refinancings. The deal benefits from credit enhancement consisting of note subordination, overcollateralization, excess spread, and a reserve account. The combined collateral pool factor is 10.91%. The Class A-1, Class A-2, and Class B Note factors are 9.72%, 9.72%, and 14.18 %, respectively. Credit enhancement currently stands at 30.69% for the Class A-1 and Class A-2 Notes and at 15.35% for the Class B Notes. The current forbearance utilization rate is 2.54%. Cumulative net losses stand at 0.08%.

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

DBRS Morningstar notes that this press release was amended on December 3, 2020, to add the date of the last rating action. The amendment was minor and would not impact the understanding of the reader.

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

The principal methodology is DBRS Morningstar Master U.S. ABS Surveillance (May 27, 2020), 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 not participate in the rating process for this rating action. DBRS Morningstar did have 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.

This rating is endorsed by DBRS Ratings Limited for use in the European Union. The following additional regulatory disclosures apply to endorsed ratings:

The last rating action on this transaction took place on November 21, 2019, when the ratings were confirmed and upgraded.

This is the fifth rating action since the Initial Rating Date.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Lead Analyst: Jon Riber, Senior Vice President, U.S. ABS
Rating Committee Chair: Chris D’Onofrio, Managing Director, Head of US ABS
Initial Rating Date: February 10, 2016

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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-- DBRS Morningstar Master U.S. ABS Surveillance (May 27, 2020)
https://www.dbrsmorningstar.com/research/361480/dbrs-morningstar-master-us-abs-surveillance