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Fitch Takes Various Actions on Keycorp Student Loan Trust 2006-A (Group I) NotesFitch Ratings has taken the following rating actions on Keycorp Student Loan Trust 2006-A (Group I): --Class A-2 at 'AAAsf'; Rating Watch Negative maintained; --Class B affirmed at 'A+sf'; Outlook Stable. KEY RATING DRIVERS Maturity Risk: The Rating Watch Negative action is based on the heightened risk of KSLT 2006-A class A-2 missing its legal final maturity of February 25, 2038, which would result in an event of default. In an event of such technical default, Fitch would expect ultimate repayment of full principal and interest after the legal final. The magnitude of the rating action could vary depending on remaining time to maturity, recent payment trends, issuer actions such as loan purchases, or other external factors. High Collateral Quality: The trust collateral is comprised of Federal Family Education Loan Program (FFELP) loans with guaranties provided by eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch's current U.S. sovereign rating is 'AAA' with a Stable Rating Outlook. Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the Class A notes, subordination provided by the Class B notes. As of November 2015, total parity is 100.25%, the release level, and senior parity is 105.43%. The parity ratios are expected to stay at this level as the trust is past the stepdown date, and should continue to release cash. Adequate Liquidity Support: Liquidity support is provided by a reserve account which is determined as the greater of 0.25% of the pool balance and $345,001. It is currently sized at the floor of $345,001. Acceptable Servicing Capabilities: KeyBank National Association is the Master Servicer for the transaction, with Pennsylvania Higher Education Assistance Agency and Great Lakes Educational Loan Services, Inc. acting as Subservicers. Fitch believes KeyBank National Association, Pennsylvania Higher Education Assistance Agency, and Great Lakes Educational Loan Services, Inc. to be acceptable servicers of FFELP student loans. RATING SENSITIVITIES Since the FFELP student loan ABS (News - Alert) relies on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults, basis risk, and loan extension risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults, basis shock beyond Fitch's published stresses, lower than expected payment speed, and other factors could result in future downgrades. Likewise, a buildup of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades. DUE DILIGENCE USAGE No third party due diligence was provided or reviewed in relation to this rating action. Additional information is available at www.fitchratings.com. Applicable Criteria Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 14 May 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744175 Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868 Exposure Draft: Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 04 Dec 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874971 Global Structured Finance Rating Criteria (pub. 06 Jul 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952 Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria (pub. 23 Jun 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750530 Additional Disclosures Dodd-Frank Rating Information Disclosure Form https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998259 Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998259 Endorsement Policy https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20160122005861/en/ |
