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Fitch Affirms Higher Education Funding I - Amended and Restated 2005 Indenture of Trust (2004) NotesFitch Ratings affirms the ratings on the senior and subordinate notes issued by Higher Education Funding I - Amended and Restated 2005 Indenture of Trust (2004). The Rating Outlook remains Stable. --2004-1 A-1 at 'AAAsf'; Outlook Stable; --2004-1 A-2 at 'AAAsf'; Outlook Stable; --2004-1 A-3 at 'AAAsf'; Outlook Stable; --2004-1 A-4 at 'AAAsf'; Outlook Stable; --2004-1 A-5 at 'AAAsf'; Outlook Stable; --2004-1 A-6 at 'AAAsf'; Outlook Stable; --2004-1 A-9 at 'AAAsf'; Outlook Stable; --2004-1 A-10 at 'AAAsf'; Outlook Stable; --2004-1 A-12 at 'AAAsf'; Outlook Stable; --2004-1 A-13 at 'AAAsf'; Outlook Stable; --2004-1 A-14 at 'AAAsf'; Outlook Stable; --2004-1 A-15 at 'AAAsf'; Outlook Stable; --2005-1 A-3 at 'AAAsf'; Outlook Stable; --2005-1 A-4 at 'AAAsf'; Outlook Stable; --2005-1 A-5 at 'AAAsf'; Outlook Stable; --2004-1 B-1 at 'AAsf'; Outlook Stable; --2004-1 B-2 at 'AAsf'; Outlook Stable. KEY RATING DRIVERS High Collateral Quality: The trust collateral comprises Federal Family Education Loan Program (FFELP) loans, including approximately 6.5% of FFELP rehabilitation 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 Outlook. Sufficient Credit Enhancement (CE): CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance), excess spread, and for the senior notes, subordination provided by the subordinate notes. As of Feb. 2016, senior and total parity levels are 108.29% and 102.30%, respectively. However, Fitch only gives credit to senior and total parity of 106% and 101%, respectively, as that is the trust's release level. Adequate Liquidity Support: Liquidity support is provided by a debt service reserve fund sized at the greater of 0.75% and $2,000,000. The debt service reserve fund is sized at $6,259,639 as of February 2016. Acceptable Servicing Capabilities: Day-to-day servicing will be provided by AES and Xerox-ES. Fitch believes them to be acceptable servicers of FFELP student loans. On Nov. 18, 2015, Fitch released its exposure draft which delineates revisions it plans to make to the 'Rating U.S. Federal Family Education Loan Program Student Loan ABS (News - Alert) Criteria', dated June 23, 2014. RATING SENSITIVITIES Since the FFELP student loan ABS 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 build-up 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 informatio is available at www.fitchratings.com. Applicable Criteria Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158 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=1002931 Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002931 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/20160420006589/en/ |
