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Navient

Following its separation from the origination arm of Sallie Mae in mid-2014, NAVI's franchise value is as a loan management, servicing, and asset recovery company. NAVI is one of four for-profit large servicers under the Dept. of Education's Direct Student Loan program, and services certain legacy FFELP loans held by third parties. NAVI provides asset recovery services on its receivables (both student loans and other asset types), for guaranty agencies (credit recovery payments for FFELP loans acting as financial intermediary between legacy lenders and the Federal government which provides the guarantee), the Dept. of Education, and other third parties. NAVI has expressed a commitment to expanding its asset recovery business outside student loans, specifically highlighting municipalities and healthcare systems. In 4Q16, NAVI confirmed that it is one of four debt collectors to receive an IRS contract to collect on certain outstanding tax debts as the government agency launches the new private collection program. (10 Dec 2018)

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November 2018 US Company Recommendation Changes

US Company Recommendation Changes: 02 Dec 2018, 9:51 PM ET - Our monthly report provides executive summaries for the forty company recommendation changes made on North American companies during the month of November.
Focused

Navient Haunted by Headlines, Back to Underperform

Company Analysis: 21 Nov 2018, 5:51 AM ET - We downshift back to an Underperform recommendation on Navient; having adopted a negative bias in 3Q18, the bubbling up of legal and administrative risk combines with core credit concerns to turn us bearish.
Focused

NAVI 3Q18: Solid Enough, but Wary of Loan Quality

Earnings Note: 24 Oct 2018, 11:50 PM ET - NAVI reported a decent 3Q18, highlighted by strong momentum in the refi loan platform. Profitability modestly improved (we think management is overstating efficiencies), and asset quality looks slightly worse. M/P but with a negative bias.

US Strategy: What to Watch for on 3Q Earning Calls

Strategy Analysis: 11 Oct 2018, 4:37 AM ET - We surveyed our analyst teams for key sector level issues they will be paying close attention to with upcoming third quarter earnings calls beyond the typical sales, margins and earnings guidance. 
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Specialty Finance: Barclays Conference Notes

Sector Analysis: 17 Sep 2018, 5:03 AM ET - We provide presentation write-ups for the slew of specialty finance companies represented at the Barclays 2018 Global Financial Services Conference this week; Ally, AmEx, CIT, Discover, iStar, and Navient.
Focused

Navient: New $500 mn Share Buyback Program

Worth Watching: 13 Sep 2018, 9:44 PM ET - Navient (Ba3/B+/BB) approved a new share repurchase program for up to $500 mn of outstanding common stock (no expiration date). The program is effective immediately and is in addition to the ~$80 mn of unused authorization approved by the board in ..

Register Now: 2018 Global Financials Seminars

Announcement: 10 Sep 2018, 9:51 PM ET - Register for our upcoming fifth annual Global Financials Seminars.
Focused

NAVI: S&P Revises Outlook to Stable from Negative

Worth Watching: 15 Aug 2018, 9:55 PM ET - NAVI (Ba3/B+/BB) had its outlook revised to stable from negative by S&P. The ratings agency attributed the revision in outlook to NAVI's improved capital position (primarily a result of the 1H18 pause in buybacks), demonstrated access to the publi ..
Focused

Navient: Names Frederick Arnold to the Board

Worth Watching: 09 Aug 2018, 7:29 PM ET - Navient (Ba3/B+/BB) named Frederick Arnold to the board of directors, effective immediately and bringing the number of boardmembers up to 10. Arnold currently serves as chairman of business development company Corporate Capital Trust and has a bac ..

Interplay Between US Banks & Fed's Balance Sheet

Sector Analysis: 08 Aug 2018, 5:36 AM ET - In this note, we discuss the impacts of the Fed's balance sheet unwind on banks. We expect that U.S. banks will become the "natural buyers" of U.S. Treasuries not bought by the Fed, offsetting the impact on rates.
Focused

NAVI 2Q18: Asset Quality Improves (Or Does It?)

Earnings Note: 25 Jul 2018, 3:30 PM ET - NAVI had a relatively quiet 2Q18, with highlights including good refi origination volumes, relatively steady margins, and improved asset quality (though we are circumspect). Stay M/P and avoid the long end of the curve.

US Banks: Update to 2018 Debt Supply Forecast

Sector Analysis: 09 Jul 2018, 5:49 AM ET - Following a review of 1H18 debt supply, we are increasing our supply forecast for the full year for the banks in our coverage universe. The majority of the increase reflects increased expectations for OpCo debt from the GSIBs.

US Banks: 2018 CCAR - It's OK to Breach Limits?

Sector Analysis: 29 Jun 2018, 5:15 AM ET - The Fed released the 2018 CCAR results. It did not object to the capital plans of 34 of the 35 banks, the exception being DB USA, Deutsche Bank's IHC. The Fed did not force a number of banks that fell below the minimums to raise capital.
Focused

Navient: California Following Suit

Worth Watching: 28 Jun 2018, 11:50 PM ET - Navient (Ba3/B+/BB) is set to be sued by a fourth state regarding alleged abuses in its student loan origination, servicing and debt collections business, with California due to join Pennsylvania, Washington and Illinois in bringing claims agai ..

Specialty Finance: Conference Recap Notes

Sector Analysis: 14 Jun 2018, 5:41 AM ET - We recap recent presentations by several fincos at the Morgan Stanley Financials conference. The sense we got from card issuers (SYF, DFS) and auto lenders (ALLY) is that consumer credit performance should remain solid and stable in 2Q18.
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HY Note: NAVI New 8Y Is Too Long for Us

HY Note: 07 Jun 2018, 11:12 AM ET - Navient is in the market for the first time in a year, looking to issue $500 mn of 8Y notes for GCP. Price talk of "high-6s" is not enough for us to get involved that far out the curve, as we prefer to remain shorter duration on the name.

U.S. Consumer Credit: 1Q18 Trends and Takeaways

Sector Analysis: 24 May 2018, 4:25 AM ET - We delve into the Fed's consumer credit data, analyzing 1Q18 trends across asset classes. We also dig in to recently released data on age distributions and one thing is clear: consumer credit has gotten grayer.

US Banks: Crapo De-reg. Bill Heads to White House

Sector Analysis: 23 May 2018, 10:27 PM ET - The House approved the Senate bill on financial (de)regulation, which is now headed to the White House to be signed into law. While the bill provides regulatory relief for regional/community banks, it has minimal impact on the big-6 banks.
Focused

Navient: Selling Tech Platform to First Data

Worth Watching: 23 May 2018, 10:23 PM ET - Navient (Ba3/B+/BB) is selling its "student loan technology platform" to First Data; the deal is expected to close in 3Q18 and terms were not disclosed. As part of the transaction, Navient's current head of Asset Management and Servicing Jeff W ..
Focused

Navient 1Q18: Quiet is Good

Earnings Note: 25 Apr 2018, 11:50 PM ET - Navient reported a solid and quiet 1Q18, and for a government policy-levered name no news is generally good news. Operating results were generally stable, although we see some downside risk on margins over the course of the year. Stay M/P.

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