OREANDA-NEWS. Fitch Ratings has affirmed the ratings for the senior notes currently rated 'AAAsf' issued by Kentucky Higher Education Student Loan Corporation (KHESLC 2013-1). The Rating Outlook remains Stable.

KEY RATING DRIVERS

High Collateral Quality: The collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch's opinion, based on the guarantees provided by the transaction's eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest.

Sufficient Credit Enhancement: CE is provided by overcollateralization (OC; the excess of trust's asset balance over bond balance) and excess spread. As of the most current distribution, reported parity is at 104.85%. Cash can only be released to the issuer when the bonds are paid in full.

Adequate Liquidity Support: Liquidity support is provided by a reserve account currently sized at \$1,409,500.

Acceptable Servicing Capabilities: KHESLC is responsible for day-to-day servicing of the trust and Nelnet Servicing LLC is the backup servicer. Fitch believes both are acceptable servicers of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS rely 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 and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has affirmed the following:

KHESLC series 2013-1 at 'AAAsf'; Outlook Stable.