OREANDA-NEWS. Fitch Ratings affirms the outstanding senior notes of two trusts, Panhandle Plains Higher Education Authority, Series 2010-1 (PPHEA 2010-1) and Panhandle Plains Higher Education Authority, Series 2010-2 (PPHEA 2010-2) at 'AAAsf'. The Rating Outlooks remain Stable.

KEY RATING DRIVERS

U. S. Sovereign Risk: The trust collateral, for both PPHEA 2010-1 and PPHEA 2010-2, consists of 100% of Federal Family Education Loan Program (FFELP) loans, with guarantees provided by the transactions' eligible guarantors and reinsurance provided by the U. S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch's U. S. sovereign rating is currently 'AAA' with a Stable Outlook.

Collateral Performance:

PPHEA 2010-1:

Fitch assumes a base case default rate of 13.75% and a 41.25% default rate under the 'AAAsf' credit stress scenario. The claim reject rate is assumed to be 0.25% in the base case and 2% in the 'AAAsf' case. Fitch applies the standard default timing curve in its credit stress cash flow analysis. The trailing 12 month average constant default rate, utilized in the maturity stresses, is 1.38%. Trailing 12 month average levels of deferment, forbearance, Income-based repayment (before adjustment) and constant prepayment rate (voluntary and involuntary) are 8.01%, 12.72%, 7.38% and 9.35%, respectively, which are used as the starting point in cash flow modelling. Subsequent declines or increases are modelled as per criteria. The borrower benefit is assumed to be approximately 0.04%, based on information provided by the sponsor.

PPHEA 2010-2:

Fitch assumes a base case default rate of 12.75% and a 38% default rate under the 'AAAsf' credit stress scenario. The claim reject rate is assumed to be 0.25% in the base case and 2% in the 'AAAsf' case. Fitch applies the standard default timing curve in its credit stress cash flow analysis. The trailing 12 month average constant default rate, utilized in the maturity stresses, is 1.97%. Trailing 12 month average levels of deferment, forbearance, Income-based repayment (before adjustment) and constant prepayment rate (voluntary and involuntary) are 9.63%, 12.36%, 8.54% and 9.46%, respectively, which are used as the starting point in cash flow modelling. Subsequent declines or increases are modelled as per criteria. The borrower benefit is assumed to be approximately 0.06%, based on information provided by the sponsor.

Basis and Interest Rate Risk: Fitch applies its standard basis and interest rate stresses to this trust as per the agency's criteria.

Payment Structure: For both trusts, Credit Enhancement (CE) is provided by excess spread and overcollateralization, and liquidity support is provided by a reserve account. Both trusts are in turbo, meaning excess cash is used to pay down the outstanding notes. Details for each trust as of the May 2016 collection period are listed below:

PPHEA 2010-1:

Senior parity is 117.93% (15.20% CE);

The reserve account currently sized at the floor of $315,000.

PPHEA 2010-2:

Senior parity is 119.05% (16.00% CE);

The reserve account currently sized at the floor of $330,000.

Maturity Risk: Fitch's student loan ABS cash flow model indicates that the notes are paid in full on or prior to the legal final maturity dates under the commensurate rating scenario.

Operational Capabilities: Panhandle-Plains Management & Servicing Corporation is the master servicer for both trusts. Day-to-day servicing is provided by the sub-servicer, ACS Education Services, Inc., which manages 100% of the outstanding loans for each trust. Fitch believes all to be acceptable servicers of FFELP student loans.

CRITERIA VARIATIONS

Under Fitch's criteria 'Rating U. S. Federal Family Education Loan Program Student Loan ABS Criteria', dated July 26, 2016, Fitch does not address the process by which it gives certain credit to short-term assets in its cash flow analysis, and it is therefore considered a criteria variation.

Under the 'Counterparty Criteria for Structured Finance and Covered Bonds', dated July 18, 2016, Fitch looks to its own ratings in analyzing counterparty risk and assessing a counterparty's creditworthiness. The definition of the permitted investment for this deal allows possibility of using investments that do not meet Fitch's criteria, this represents a criteria variation. Fitch doesn't believes such variation have a measurable impact upon the ratings assigned.

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 buildup of CE driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

Fitch has affirmed the following ratings:

Panhandle-Plains Higher Education Authority, Series 2010-1

--Class A-2 at 'AAAsf'; Outlook Stable;

--Class A-3 at 'AAAsf'; Outlook Stable;

--Class A-4 at 'AAAsf'; Outlook Stable.

Panhandle-Plains Higher Education Authority, Series 2010-2

--Class A-1 at 'AAAsf'; Outlook Stable.