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Fitch upgrades Sallie Mae, affirms Navient

Fitch Ratings has upgraded Sallie Mae's and Sallie Mae Bank's long-term issuer default ratings to BB+ from BB.

The outlook has been revised to stable from positive.

Fitch said the upgrade took into account Sallie Mae's stable credit performance, a moderation in loan growth, improved core operating performance and strong market position in the U.S. private education loan industry.

The stable outlook reflects Fitch's expectation that Sallie Mae's credit performance will be consistent with management's cumulative loss forecasts through the cycle. It also takes into account Sallie Mae's further moderation of loan growth and stabilization of its capital ratios, strong profitability expectations, and the expectation that the company will maintain its strong competitive position, Fitch said.

The agency also affirmed Navient Corp.'s long-term issuer default rating at BB and short-term issuer default rating at B, both with a stable outlook.

The affirmation reflects the company's market position as the largest nongovernment owner and servicer of student loans, a demonstrated track record in the space, the low credit risk and predictable cash flow nature of its federal student loan assets and fee-based businesses, appropriate risk-adjusted capitalization, adequate liquidity, and a seasoned management team.

Fitch said the outlook reflects its belief that Navient will continue to access the unsecured debt and asset-backed securities markets at a reasonable cost, the company's maintenance of strong liquidity levels, its ability to appropriately manage credit risk on private student loans, and the moderate demand on capital and liquidity from new business initiatives.